Point /nonpoint source trading of pollution abatement: Choosing the right trading ratio

Arun S. Malik, David Letson, Stephen R. Crutchfield

Research output: Contribution to journalArticle

90 Scopus citations

Abstract

In programs for trading pollution abatement between point and nonpoint sources, the trading ratio specifies the rate at which nonpoint source abatement can be substituted for point source abatement. The appropriate value of this ratio is unclear because of qualitative differences between the two classes of sources. To identify the optimal trading ratio, we develop and analyze a model of point/nonpoint trading. We find the optimal trading ratio depends on the relative costs of enforcing point versus nonpoint reductions and on the uncertainty associated with nonpoint loadings. The uncertainty does not imply a lower bound for the optimal trading ratio.

Original languageEnglish (US)
Pages (from-to)959-967
Number of pages9
JournalAmerican Journal of Agricultural Economics
Volume75
Issue number4
DOIs
StatePublished - 1993
Externally publishedYes

Keywords

  • Enforcement costs
  • Nonpoint source pollution
  • Pollution trading
  • Technology adoption
  • Water quality

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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