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Optimal management of a eutrophied coastal ecosystem: balancing agricultural and municipal abatement measures

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Author Info

  • Marita Laukkanen

    ()

  • Anni Huhtala

    ()

Abstract

Agriculture and municipal wastewater are the principal sources of eutrophying nutrients in many water ecosystems. We develop a model which considers the characteristics of agricultural and municipal nutrient abatement. The model explicitly accounts for the investment needed to set up wastewater treatment facilities, and makes it possible to determine the optimal timing of investment as well as the optimal agricultural and municipal abatement levels. We apply the model to the Finnish coastal waters of the Gulf of Finland. Our results indicate that substantial savings in abatement costs and the damage associated with eutrophication could be obtained by constructing the facilities needed to process all the wastewaters entering the coastal ecosystem. The optimal timing of investment is shown to hinge on both the economic and ecological characteristics of the ecosystem.

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File URL: http://hdl.handle.net/10.1007/s10640-007-9099-2
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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 39 (2008)
Issue (Month): 2 (February)
Pages: 139-159

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Handle: RePEc:kap:enreec:v:39:y:2008:i:2:p:139-159

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: Eutrophication control; Nutrient abatement; Endogenous regime switches; Environmental policy;

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References

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  1. Elofsson, Katarina, 2003. "Cost-effective reductions of stochastic agricultural loads to the Baltic Sea," Ecological Economics, Elsevier, vol. 47(1), pages 13-31, November.
  2. Pindyck, Robert S., 1998. "Irreversibilities and the timing of environmental policy," Working papers WP 4047-98., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  3. Tomiyama, Ken, 1985. "Two-stage optimal control problems and optimality conditions," Journal of Economic Dynamics and Control, Elsevier, vol. 9(3), pages 317-337, November.
  4. Gren, Ing-Marie & Folmer, Henk, 2003. "Cooperation with respect to cleaning of an international water body with stochastic environmental damage: the case of the Baltic Sea," Ecological Economics, Elsevier, vol. 47(1), pages 33-42, November.
  5. Mäler, K-G. & Xepapadeas, A. & Zeeuw, A.J. de, 2003. "The economics of shallow lakes," Open Access publications from Tilburg University urn:nbn:nl:ui:12-123314, Tilburg University.
  6. Eric N�vdal, 2001. "Optimal Regulation of Eutrophying Lakes, Fjords, and Rivers in the Presence of Threshold Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 972-984.
  7. Ing-Marie Gren, 2001. "International Versus National Actions Against Nitrogen Pollution of the Baltic Sea," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 20(1), pages 41-59, September.
  8. Markowska, Agnieszka & Zylicz, Tomasz, 1999. "Costing an international public good: the case of the Baltic Sea," Ecological Economics, Elsevier, vol. 30(2), pages 301-316, August.
  9. Turner, R. Kerry & Georgiou, Stavros & Gren, Ing-Marie & Wulff, Fredric & Barrett, Scott & Soderqvist, Tore & Bateman, Ian J. & Folke, Carl & Langaas, Sindre & Zylicz, Tomasz, 1999. "Managing nutrient fluxes and pollution in the Baltic: an interdisciplinary simulation study," Ecological Economics, Elsevier, vol. 30(2), pages 333-352, August.
  10. Koikkalainen, Kauko & Laukkanen, Marita & Helin, Janne, 2006. "Abatement costs for agricultural nitrogen and phosphorus loads: a case study of South-Western Finland," Discussion Papers 11867, MTT Agrifood Research Finland.
  11. Makris, Miltiadis, 2001. "Necessary conditions for infinite-horizon discounted two-stage optimal control problems," Journal of Economic Dynamics and Control, Elsevier, vol. 25(12), pages 1935-1950, December.
  12. Hart, Rob, 2003. "Dynamic pollution control--time lags and optimal restoration of marine ecosystems," Ecological Economics, Elsevier, vol. 47(1), pages 79-93, November.
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Citations

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Cited by:
  1. Kuosmanen, Timo & Laukkanen, Marita, 2009. "(In)Efficient Management of Interacting Environmental Bads," Discussion Papers 54287, MTT Agrifood Research Finland.
  2. Sergey Rabotyagov & Catherine L. Kling & Philip W. Gassman & Nancy N. Rabalais & R. Eugene Turner, 2012. "Economics of Dead Zones: Linking Externalities from the Land to their Consequences in the Sea, The," Center for Agricultural and Rural Development (CARD) Publications 12-wp534, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  3. Hyytiainen, Kari & Ahtiainen, Heini & Heikkila, Jaakko & Helin, Janne & Huhtala, Anni & Iho, Antti & Koikkalainen, Kauko & Miettinen, Antti & Pouta, Eija & Vesterinen, Janne, 2009. "An integrated simulation model to evaluate national policies for the abatement of agricultural nutrients in the Baltic Sea," Discussion Papers 49896, MTT Agrifood Research Finland.
  4. Hyytiäinen, Kari & Huhtala, Anni, 2011. "Combating eutrophication in coastal areas at risk for oil spills," MPRA Paper 38087, University Library of Munich, Germany.

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