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Evaluating environmental policies under uncertainty through application of robust nonlinear programming

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  • Doole, Graeme
  • Pannell, David J.

Abstract

Environmental policy evaluation is characterised by a paucity of information. The novel technique of robust mathematical programming is introduced as a means to proactively account for this uncertainty in policy analysis. The procedure allows identification of expected bounds on the range of abatement costs associated with environmental policy. It also has the advantage of not limiting conclusions to realisations of specific point estimates or probability distributions. Empirical insights are provided in an application to a New Zealand inland lake threatened by nitrate pollution from dairy farming. Overall, this novel framework is demonstrated to have several key advantages, including explicit treatment of severe uncertainty, capacity to bound the range of expected abatement costs accruing to a given policy instrument, and the opportunity to identify robust plans that are immune to parametric variation.

Suggested Citation

  • Doole, Graeme & Pannell, David J., 2011. "Evaluating environmental policies under uncertainty through application of robust nonlinear programming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(4), pages 1-18.
    • Handle: RePEc:ags:aareaj:197000
    DOI: 10.22004/ag.econ.197000
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    1. Doole, Graeme J. & Romera, Alvaro J., 2014. "Cost-effective regulation of nonpoint emissions from pastoral agriculture: a stochastic analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), July.
    2. Doole, Graeme J. & Romera, Alvaro J., 2014. "Implications of a nitrogen leaching efficiency metric for pasture-based dairy farms," Agricultural Water Management, Elsevier, vol. 142(C), pages 10-18.
    3. Doole, Graeme J. & Romera, Alvaro J., 2015. "Trade-offs between profit, production, and environmental footprint on pasture-based dairy farms in the Waikato region of New Zealand," Agricultural Systems, Elsevier, vol. 141(C), pages 14-23.
    4. Doole, Graeme J. & Marsh, Dan K., 2014. "Methodological limitations in the evaluation of policies to reduce nitrate leaching from New Zealand agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(1), January.
    5. Stott, Kerry & Doole, Graeme J. & Vigiak, Olga & Kumaran, Thabo & Roberts, Anna M., 2012. "The relationship between farm profit and nitrogen exports on representative dairy farms in the Moe River catchment, Victoria," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124454, Australian Agricultural and Resource Economics Society.

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    Environmental Economics and Policy;

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