Investment decisions and transferable discharge permits

An empirical study of water quality management under policy uncertainty

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

The problem of investiment decisions for sources participating in transferable discharge permit (TDP) markets has not received much attention. One way TDPs offer potential savings is with their ability to influence development in a region. Static models have assessed the potential savings of TDPs but do not explicitly consider investment decisions; thus they do not capture this long run role nor that of policy uncertainty and tend to understate both the cost saving potential and the difficulty in achieving it. This paper addresses both problems by emphasizing the temporal dimension of TDPs. A two-period investment model investigates the magnitude of these potential savings and the effects of two types of policy uncertainty upon expected gains from permit trading.

Original languageEnglish (US)
Pages (from-to)441-458
Number of pages18
JournalEnvironmental & Resource Economics
Volume2
Issue number5
DOIs
StatePublished - Sep 1992
Externally publishedYes

Fingerprint

savings
market
cost
decision
water quality management
policy
Quality management
Investment decision
Empirical study
Savings
Policy uncertainty
Water quality
effect
Permit trading
Cost savings

Keywords

  • Environmental regulation
  • regional planning
  • water quality

ASJC Scopus subject areas

  • Environmental Science (miscellaneous)
  • Economics and Econometrics

Cite this

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abstract = "The problem of investiment decisions for sources participating in transferable discharge permit (TDP) markets has not received much attention. One way TDPs offer potential savings is with their ability to influence development in a region. Static models have assessed the potential savings of TDPs but do not explicitly consider investment decisions; thus they do not capture this long run role nor that of policy uncertainty and tend to understate both the cost saving potential and the difficulty in achieving it. This paper addresses both problems by emphasizing the temporal dimension of TDPs. A two-period investment model investigates the magnitude of these potential savings and the effects of two types of policy uncertainty upon expected gains from permit trading.",
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AB - The problem of investiment decisions for sources participating in transferable discharge permit (TDP) markets has not received much attention. One way TDPs offer potential savings is with their ability to influence development in a region. Static models have assessed the potential savings of TDPs but do not explicitly consider investment decisions; thus they do not capture this long run role nor that of policy uncertainty and tend to understate both the cost saving potential and the difficulty in achieving it. This paper addresses both problems by emphasizing the temporal dimension of TDPs. A two-period investment model investigates the magnitude of these potential savings and the effects of two types of policy uncertainty upon expected gains from permit trading.

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