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Optimal Control of Nutrient Pollution in a Coastal Ecosystem: Agricultural Abatement versus Investment in Wastewater Treatment Capacity

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  • Laukkanen, Marita
  • Huhtala, Anni

Abstract

We examine in a dynamic framework how public resources should be allocated to small-scale water protection efforts in agriculture or alternatively to investments in large-scale waste water treatment plants to control point source loads. The building of waste water treatment capacity is characterized by high set-up costs as compared to the operating costs. We determine the optimal timing of investment, the rate of nutrient load reduction from point versus non-point sources, and the optimal switching policies from control of non-point pollution only to control of both non-point and point sources. The results of the analytical model are illustrated with simulation of optimal abatement policies for the Finnish coastal waters in the Gulf of Finland.

Suggested Citation

  • Laukkanen, Marita & Huhtala, Anni, 2005. "Optimal Control of Nutrient Pollution in a Coastal Ecosystem: Agricultural Abatement versus Investment in Wastewater Treatment Capacity," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24451, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae05:24451
    DOI: 10.22004/ag.econ.24451
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    1. Arun S. Malik & David Letson & Stephen R. Crutchfield, 1993. "Point/Nonpoint Source Trading of Pollution Abatement: Choosing the Right Trading Ratio," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(4), pages 959-967.
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    3. Hart, Rob, 2003. "Dynamic pollution control--time lags and optimal restoration of marine ecosystems," Ecological Economics, Elsevier, vol. 47(1), pages 79-93, November.
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    6. Turner, R. Kerry & Georgiou, Stavros & Gren, Ing-Marie & Wulff, Fredric & Barrett, Scott & Soderqvist, Tore & Bateman, Ian J. & Folke, Carl & Langaas, Sindre & Zylicz, Tomasz, 1999. "Managing nutrient fluxes and pollution in the Baltic: an interdisciplinary simulation study," Ecological Economics, Elsevier, vol. 30(2), pages 333-352, August.
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    Cited by:

    1. Constadina Passa & Anastasios Xepapadeas, 2008. "Regulation of Farming Activities: An Evolutionary Approach," Working Papers 0811, University of Crete, Department of Economics.

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