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Assessing the Distributional Impacts of Transferable Pollution Permits: The Case of Phosphorus Pollution Management at a River Basin Scale

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  • Kampas, Athanasios
  • Mamalis, Spyridon

Abstract

Although the initial allocation of pollution permits is neutral in terms of efficiency, it does have a significant impact on distributive equity. In this paper, we examine the two main categories of permit allocation rules, the distributive and the reductive, for controlling phosphorus pollution in a small catchment in South West England. Based on the premise that the regulatory choice compromises efficiency and equity, the main result of this paper is that an allocation of permits in proportion to the intensity of environmental preferences is a “win-win†choice. The reason is that it simultaneously achieves two goals. First, it is efficient (or cost-effective) since a permit system achieves a prespecified target at a minimum abatement cost, while second, it is the only allocation rule which reduces the income inequality of the baseline scenario.

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File URL: http://purl.umn.edu/44115
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Bibliographic Info

Article provided by Greek Association of Agricultural Economists in its journal Agricultural Economics Review.

Volume (Year): 07 (2006)
Issue (Month): 2 (August)
Pages:

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Handle: RePEc:ags:aergaa:44115

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Related research

Keywords: pollution permits; phosphorus; nutrient management; export coefficient model; water quality; distributive justice; income inequality; Atkinson Index; Environmental Economics and Policy;

References

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  1. Böhringer, Christoph & Lange, Andreas, 2003. "On the Design of Optimal Grandfathering Schemes for Emission Allowances," ZEW Discussion Papers 03-08, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Rose, Adam & Stevens, Brandt, 1993. "The efficiency and equity of marketable permits for CO2 emissions," Resource and Energy Economics, Elsevier, vol. 15(1), pages 117-146, March.
  3. CHANDER, Parkash & TULKENS, Henry, . "Theoretical foundations of negotiations and cost sharing in transfrontier pollution problems," CORE Discussion Papers RP -983, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Adam Rose & Zhong Zhang, 2004. "Interregional burden-sharing of greenhouse gas mitigation in the United States," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 9(4), pages 477-500, October.
  5. Ridgley, Mark A, 1996. "Fair sharing of greenhouse gas burdens," Energy Policy, Elsevier, vol. 24(6), pages 517-529, June.
  6. Nick Hanley & Ian Moffatt, 1992. "Efficiency and Distributional Aspects of Market Mechanisms in the Control of Pollution: An Empirical Analysis," Working Papers Series 92/2, University of Stirling, Division of Economics.
  7. Adam Rose & Gbadebo Oladosu, 2002. "Greenhouse Gas Reduction Policy in the United States: Identifying Winners and Losers in an Expanded Permit Trading System," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-18.
  8. Tietenberg, Tom, 1998. "Ethical influences on the evolution of the US tradable permit approach to air pollution control," Ecological Economics, Elsevier, vol. 24(2-3), pages 241-257, February.
  9. Le Breton, Michel & Moyes, Patrick & Trannoy, Alain, 1996. "Inequality Reducing Properties of Composite Taxation," Journal of Economic Theory, Elsevier, vol. 69(1), pages 71-103, April.
  10. Peter Bohm & Bjorn Larsen, 1994. "Fairness in a tradeable-permit treaty for carbon emissions reductions in Europe and the former Soviet Union," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 4(3), pages 219-239, June.
  11. Atkinson, Scott & Tietenberg, Tom, 1991. "Market failure in incentive-based regulation: The case of emissions trading," Journal of Environmental Economics and Management, Elsevier, vol. 21(1), pages 17-31, July.
  12. Ringius, Lasse & Torvanger, Asbjorn & Holtsmark, Bjart, 1998. "Can multi-criteria rules fairly distribute climate burdens?: OECD results from three burden sharing rules," Energy Policy, Elsevier, vol. 26(10), pages 777-793, August.
  13. Kampas, Athanasios & White, Ben, 2003. "Selecting permit allocation rules for agricultural pollution control: a bargaining solution," Ecological Economics, Elsevier, vol. 47(2-3), pages 135-147, December.
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