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Cost-Effective and Stochastic Dominance Approaches to Stochastic Pollution Control

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  • Richard Horan

Abstract

Most economic studies of pollution externalities focus on the relative efficiency or cost-effectiveness of alternative pollution control instruments. Much less attention has been paid to policy goals and objectives. However, a comprehensive pollution control strategy depends on all of these choices. This paper examines several efficiency properties of cost-effective pollution control strategies in a stochastic setting when economic damages from pollution are unknown. A number of policy goals are considered. In this setting and under a primal approach, it is found that certain stochastic dominance conditions must be satisfied for the strategies to exhibit desirable efficiency properties. A dual approach to cost-effective pollution control, which is based on a stochastic dominance objective, is also considered. Copyright Kluwer Academic Publishers 2001

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  • Richard Horan, 2001. "Cost-Effective and Stochastic Dominance Approaches to Stochastic Pollution Control," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 18(4), pages 373-389, April.
    • Handle: RePEc:kap:enreec:v:18:y:2001:i:4:p:373-389
    DOI: 10.1023/A:1011113726358
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    References listed on IDEAS

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    1. James Shortle & David Abler & Richard Horan, 1998. "Research Issues in Nonpoint Pollution Control," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 571-585, April.
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    4. Wirl, Franz & Noll, Juergen, 2007. "Voluntary (environmental) standards," Journal of Economics and Business, Elsevier, vol. 59(4), pages 275-285.
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    6. Horan, Richard D. & Lupi, Frank, 2003. "Tradable Risk Permits To Prevent Future Introductions Of Alien Invasive Species Into The Great Lakes," 2003 Annual meeting, July 27-30, Montreal, Canada 22111, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. John Tisdell & Daniel Clowes, 2008. "The problem of uncertain nonpoint pollution credit production in point and nonpoint emission trading markets," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 9(1), pages 25-42, March.
    8. Elofsson, Katarina & Folmer, Henk & Gren, Ing-Marie, 2003. "Management of eutrophicated coastal ecosystems: a synopsis of the literature with emphasis on theory and methodology," Ecological Economics, Elsevier, vol. 47(1), pages 1-11, November.

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