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Price Endogeneity and Marginal Cost Effects on Incentive Compatible Stormwater Management Policies

Author

Listed:
  • Huber, Matthew C.
  • Willis, David B.
  • Hayes, John C.
  • Privette, Charles V., III

Abstract

Incentive based stormwater management policies offer the prospect of reducing urban stormwater runoff while increasing developer profits. An incentive compatible Stormwater Banking Program (SBP) is presented that allows developers to build at higher residential densities in exchange for including low impact stormwater Best Management Practices (BMPs) in the development’s stormwater management infrastructure. Price endogeneity presents itself when the smaller residential lots created by building at a greater density sell for a lower price than the original, larger lots. Stormwater management authorities must be aware of this and the effects of the program participation fee structure in designing voluntary incentive based policies that meet runoff reduction objectives.

Suggested Citation

  • Huber, Matthew C. & Willis, David B. & Hayes, John C. & Privette, Charles V., III, 2010. "Price Endogeneity and Marginal Cost Effects on Incentive Compatible Stormwater Management Policies," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61859, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61859
    DOI: 10.22004/ag.econ.61859
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    References listed on IDEAS

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    1. Randall, Alan & Taylor, Michael A., 2000. "Incentive-Based Solutions To Agricultural Environmental Problems: Recent Developments In Theory And Practice," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(2), pages 1-14, August.
    2. ,, 2000. "Problems And Solutions," Econometric Theory, Cambridge University Press, vol. 16(2), pages 287-299, April.
    3. Randall, Alan & Taylor, Michael A., 2000. "Incentive-Based Solutions to Agricultural Environmental Problems: Recent Developments in Theory and Practice," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 32(2), pages 221-234, August.
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