The Economics of Total Maximum Daily Loads

Abstract

This article begins by exploring the institutional and historical forces shaping the total maximum daily load (TMDL) approach from an economic perspective. Next, it discusses the suitability of applying various types of economic analyses and policy instruments to individual TMDLs or the TMDL program. Cost-effectiveness analysis is shown to be particularly amenable to and appropriate for application to individual TMDLs while pollution trading may offer a mechanism for achieving water quality goals at lower cost. The final section of the article presents a case study that documents a formal application of economic analyses to an actual TMDL.