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A POLLUTION TRADING SYSTEM WITH COST ASSYMETRY: An Application to Nonpoint Source Trading in the Boone River Watershed

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  • Valcu, Adriana M.
  • Kling, Catherine L.

Abstract

The goal of watershed scale analysis is to assign to each field unit the best set of agricultural practices in order to achieve a maximum outcome from both environmental and economic perspectives. Watershed physically based models linked to multiobjective optimization models can overcome the high dimensionality of watershed pollution problem. Market based instruments such as permit trading settings which consider abatement measures’ cost heterogeneity have been regarded as being superior to command and control programs. Empirical analysis reveals that when local environmental authority and farmers have different cost information, a permit trading program has the potential to offer cost savings.

Suggested Citation

  • Valcu, Adriana M. & Kling, Catherine L., 2011. "A POLLUTION TRADING SYSTEM WITH COST ASSYMETRY: An Application to Nonpoint Source Trading in the Boone River Watershed," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103719, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:103719
    DOI: 10.22004/ag.econ.103719
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    References listed on IDEAS

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    1. Morgan, Cynthia L. & Coggins, Jay S. & Eidman, Vernon R., 2000. "Tradable Permits For Controlling Nitrates In Groundwater At The Farm Level: A Conceptual Model," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(2), pages 1-10, August.
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    3. Lyubov A. Kurkalova & Christopher Burkart & Silvia Secchi, 2004. "Cropland Cash Rental Rates in the Upper Mississippi River Basin," Center for Agricultural and Rural Development (CARD) Publications 04-tr47, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    4. R. Prabodanie & John Raffensperger & Mark Milke, 2010. "A Pollution Offset System for Trading Non-Point Source Water Pollution Permits," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(4), pages 499-515, April.
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