Comparing Policies to Improve Water Quality When Dischargers of Pollutants are Strategic

Water International, Vol. 30, No. 2, pp. 166-173, June 2005

Posted: 25 Jul 2007

See all articles by Amyaz A. Moledina

Amyaz A. Moledina

College of Wooster

Robert Johansson

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Abstract

Market-based instruments such as fees or tradable perm its can be used to simultaneously regulate point and non-point sources of pollution discharge into a river However sources of pollution discharge often have more information about their own costs of pollution abatement than do regulators. This information asymmetry may lead to strategic behavior which can lead to different outcomes under different policies. This paper estimates a Nash payoff of a two-period strategic game using econometrically estimated abatement costs for point and non-point source phosphorus discharges in the Minnesota River Basin. Results show that when dischargers of pollutants are strategic, discharge perm its may yield lower deadweight losses than discharge fees.

Keywords: pollution permits, trading, phosphorous, non-point source

JEL Classification: Q25, Q28

Suggested Citation

Moledina, Amyaz A. and Johansson, Robert, Comparing Policies to Improve Water Quality When Dischargers of Pollutants are Strategic. Water International, Vol. 30, No. 2, pp. 166-173, June 2005, Available at SSRN: https://ssrn.com/abstract=1002662

Amyaz A. Moledina (Contact Author)

College of Wooster ( email )

Department of Economics, Morgan Hall
College of Wooster
Wooster, OH 44691
United States
(330) 263-2287 (Phone)

HOME PAGE: http://www.wooster.edu/economics/amoledina/

Robert Johansson

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5485 (Phone)

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