Economics and Environmental Markets: Lessons from Water-quality Trading

Water-quality trading is an area of active development in environmental markets. Unlike iconic national-scale air-emission trading programs, water-quality trading programs address local or regional water quality and are largely the result of innovations in water-pollution regulation by state or substate authorities rather than by national agencies. This article examines lessons from these innovations about the "real world" meaning of trading and its mechanisms, the economic merits of alternative institutional designs, utilization of economic research in program development, and research needed to improve the success of environmental markets for water quality

THE USE OF ESTIMATED POLLUTION FLOWS IN AGRICULTURAL POLLUTION CONTROL POLICY: IMPLICATIONS FOR ABATEMENT AND POLICY INSTRUMENTS

Flows of water pollutants from agricultural sources are, for all practical purposes, unobservable by direct monitoring. These flows can, however, be estimated using hydrological models. The analysis presented in this paper demonstrates that uncertainty on estimated flows is not neutral with respect to the optimal level and allocation of estimated abatement or with respect to the expected net benefits of alternative pollution control policy instruments. Policy implications are noted.Resource /Energy Economics and Policy,

Agricultural Nonpoint Source Pollution Control in Theory and Practice

The theory of efficient policy instruments for agricultural pollution control has been evolving. Some new developments suggest that policies using financial incentives to encourage desirable farming practices are superior to those focusing on runoff directly or restrictions on farming practices. However, the theoretical models used to derive such results make assumptions about conditions that may not hold. As a result, implementation of the findings of such models is not necessarily routine. This article attempts to summarize these studies and interpret their implications for agricultural nonpoint source pollution control for the Chesapeake Bay.Environmental Economics and Policy, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,

Transactions Costs and Point-Nonpoint Source Water Pollution Trading

The implications of transactions costs for the performance of water pollution trading involving point and nonpoint sources are examined. The analysis focuses on the impacts of transaction costs on different classes of trading partners and its consequence on the trading equilibrium. The model of point-nonpoint water pollution trading in the context of the total maximum daily loads explicitly incorporates transactions costs for both buying and selling exchanges of nonpoint source and point source permits. Transactions costs unarguably reduce the optimal level of trades in both types of permits compared to the costless trade case.Environmental Economics and Policy,

Can Taxing Sugary Soda Influence Consumption and Avoid Unanticipated Consequences?

Nonpoint Source Pollution, Total Maximum Daily Load (TMDL), Best Management Practice, Conservation Program, Policy Instruments, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Q58,

The Value of Sample Information for Water Quality Management

There is considerable interest in watershed-based pollution water quality protection but the approach can be highly information intensive (USEPA 2004, NRC 2000). This study examines the value of different types and levels of information for water quality management in the Conestoga watershed. For this estimation, a Monte Carlo procedure is used to construct the posterior expected value. Then, an Evolutionary Optimization Strategy with Covariance Matrix Adaptation (CMA-ES) is used to compute the expected value of optimized resources allocations given posterior information structures for specific sample sizes. This posterior optimization is nested within a second Monte Carlo simulation that computes the preposterior expectation (a nested Monte Carlo procedure). Thus, this paper provides some insight about the relative values of these alternative types of information for controlling water pollution from agriculture, and the gains from more intensive sampling.Environmental Economics and Policy,

Coordination and Miss-Coordination in Market Entry Games with an Application to Congestion Externalities

Marketing,

FOREWORD: Special Issue on Trade

International Relations/Trade,

Using DEA and VEA to Evaluate Quality of Life in the Mid-Atlantic States

In this study we use data envelopment analysis (DEA) and an extension of DEA called value efficiency analysis (VEA) to explore the “"production”" of quality of life within counties in the mid-Atlantic region and the extent to which production frontiers and efficiency differ between rural and urban counties. These methods allow us to identify counties that are inefficient in their quality of life production, and to rank (using DEA) those counties according to their distance from a performance standard established by other observed counties(using VEA), or by a single unit designated as "“most preferred"(using VEA).”data envelopment analysis, value efficiency analysis, quality of life, Community/Rural/Urban Development,

THE POLITICAL ECONOMY OF WATER QUALITY PROTECTION FROM AGRICULTURAL CHEMICALS

Environmental Economics and Policy,