IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v61y2015i2p217-241.html
   My bibliography  Save this article

Policy Goals for Improved Water Quality in the Baltic Sea: When do the Benefits Outweigh the Costs?

Author

Listed:
  • Kari Hyytiäinen
  • Lassi Ahlvik
  • Heini Ahtiainen
  • Janne Artell
  • Anni Huhtala
  • Kim Dahlbo

Abstract

This paper develops and applies a spatially explicit bioeconomic model to study transboundary nutrient pollution of the Baltic Sea. We combine catchment, marine and economic models covering the entire Baltic Sea region to weigh the costs of nutrient abatement and the benefits of improved water quality and solve for the optimal level of water protection. The overall benefits of the Baltic Sea Action Plan, the present convention on nutrient abatement, clearly outweigh the costs. Nevertheless, the total cost could be almost halved if the mix of measures and the regional targets were planned in a spatially cost–effective manner and if the consequent reductions of nitrogen and phosphorus, the two nutrients causing eutrophication, were better balanced. Policy optimizations, however, suggest that the optimal level of nutrient abatement is somewhat lower than the more ambitious level envisaged by the convention. The welfare gains from cost sharing that makes the optimal level of nutrient abatement worthwhile for all littoral countries would be 170 million euros annually. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Kari Hyytiäinen & Lassi Ahlvik & Heini Ahtiainen & Janne Artell & Anni Huhtala & Kim Dahlbo, 2015. "Policy Goals for Improved Water Quality in the Baltic Sea: When do the Benefits Outweigh the Costs?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(2), pages 217-241, June.
    • Handle: RePEc:kap:enreec:v:61:y:2015:i:2:p:217-241
    DOI: 10.1007/s10640-014-9790-z
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10640-014-9790-z
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10640-014-9790-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Marita Laukkanen & Anni Huhtala, 2008. "Optimal management of a eutrophied coastal ecosystem: balancing agricultural and municipal abatement measures," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(2), pages 139-159, February.
    2. Ing-Marie Gren & Paul Jannke & Katarina Elofsson, 1997. "Cost-Effective Nutrient Reductions to the Baltic Sea," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(4), pages 341-362, December.
    3. Heini Ahtiainen & Janne Artell & Mikołaj Czajkowski & Berit Hasler & Linus Hasselström & Anni Huhtala & Jürgen Meyerhoff & James C.R. Smart & Tore Söderqvist & Mohammed H. Alemu & Daija Angeli & Kim D, 2014. "Benefits of meeting nutrient reduction targets for the Baltic Sea - a contingent valuation study in the nine coastal states," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 3(3), pages 278-305, November.
    4. D. Acemoglu & J. Robinson, 2013. "Economics versus politics: pitfalls of policy advice," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 12.
    5. Robert S. Pindyck, 2013. "Climate Change Policy: What Do the Models Tell Us?," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 860-872, September.
    6. 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.
    7. Elofsson, Katarina, 2003. "Cost-effective reductions of stochastic agricultural loads to the Baltic Sea," Ecological Economics, Elsevier, vol. 47(1), pages 13-31, November.
    8. Smith, Martin D. & Sanchirico, James N. & Wilen, James E., 2009. "The economics of spatial-dynamic processes: Applications to renewable resources," Journal of Environmental Economics and Management, Elsevier, vol. 57(1), pages 104-121, January.
    9. Lindhjem, Henrik & Navrud, Ståle, 2008. "How reliable are meta-analyses for international benefit transfers?," Ecological Economics, Elsevier, vol. 66(2-3), pages 425-435, June.
    10. Richard Carson & Theodore Groves, 2007. "Incentive and informational properties of preference questions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 181-210, May.
    11. Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481.
    12. Ashar Aftab & Nick Hanley & Athanasios Kampas, 2007. "Co-ordinated environmental regulation: controlling non-point nitrate pollution while maintaining river flows," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(4), pages 573-593, December.
    13. Lassi Ahlvik & Yulia Pavlova, 2013. "A Strategic Analysis of Eutrophication Abatement in the Baltic Sea," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(3), pages 353-378, November.
    14. 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.
    15. Nordhaus, William D., 1993. "Rolling the 'DICE': an optimal transition path for controlling greenhouse gases," Resource and Energy Economics, Elsevier, vol. 15(1), pages 27-50, March.
    16. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801.
    17. Sanchirico, James N. & Wilen, James E., 2005. "Optimal spatial management of renewable resources: matching policy scope to ecosystem scale," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 23-46, July.
    18. Massey, D. Matthew & Newbold, Stephen C. & Gentner, Brad, 2006. "Valuing water quality changes using a bioeconomic model of a coastal recreational fishery," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 482-500, July.
    19. Lindhjem, Henrik & Navrud, Ståle, 2011. "Are Internet surveys an alternative to face-to-face interviews in contingent valuation?," Ecological Economics, Elsevier, vol. 70(9), pages 1628-1637, July.
    20. Portney, Paul R., 2004. "The Obligations of a Policy Economist," Agricultural and Resource Economics Review, Cambridge University Press, vol. 33(2), pages 159-161, October.
    21. Tol, Richard S. J., 2001. "Equitable cost-benefit analysis of climate change policies," Ecological Economics, Elsevier, vol. 36(1), pages 71-85, January.
    22. Kiseleva, Tatiana & Wagener, F.O.O., 2010. "Bifurcations of optimal vector fields in the shallow lake model," Journal of Economic Dynamics and Control, Elsevier, vol. 34(5), pages 825-843, May.
    23. Chen, Yong & Jayaprakash, Ciriyam & Irwin, Elena, 2012. "Threshold management in a coupled economic–ecological system," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 442-455.
    24. Elofsson, Katarina, 2010. "Cost-effectiveness of the Baltic Sea Action Plan," Marine Policy, Elsevier, vol. 34(5), pages 1043-1050, September.
    25. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
    26. Ahtiainen, Heini & Hasselstrom, Linus & Artell, Janne & Angeli, Daija & Czajkowski, Mikouaj & Meyerhoff, Jurgen & Alemu, Mohammed & Dahlbo, Kim & Fleming-Lehtinen, Vivi & Hasler, Berit & Hyytiainen, K, 2012. "Benefits of meeting the Baltic Sea nutrient reduction targets - Combining ecological modelling and contingent valuation in the nine littoral states," Discussion Papers 127123, MTT Agrifood Research Finland.
    27. Portney, Paul R., 2004. "The Obligations of a Policy Economist," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 33(2), pages 1-3, October.
    28. Batabyal, Amitrajeet A. & Kahn, James R. & O'Neill, Robert V., 2003. "On the scarcity value of ecosystem services," Journal of Environmental Economics and Management, Elsevier, vol. 46(2), pages 334-352, September.
    29. Maar, Marie & Møller, Eva Friis & Larsen, Jesper & Madsen, Kristine Skovgaard & Wan, Zhenwen & She, Jun & Jonasson, Lars & Neumann, Thomas, 2011. "Ecosystem modelling across a salinity gradient from the North Sea to the Baltic Sea," Ecological Modelling, Elsevier, vol. 222(10), pages 1696-1711.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liu, Hongxing & Gopalakrishnan, Sathya & Browning, Drew & Sivandran, Gajan, 2019. "Valuing water quality change using a coupled economic-hydrological model," Ecological Economics, Elsevier, vol. 161(C), pages 32-40.
    2. Soile Oinonen & Lone Grønbæk & Marita Laukkanen & Polina Levontin & Marko Lindroos & Emmi Nieminen & Katja Parkkila & Pedro Pintassilgo & Henni Pulkkinen & Atso Romakkaniemi, 2016. "International Fisheries Management and Recreational Benefits: The Case of Baltic Salmon," Marine Resource Economics, University of Chicago Press, vol. 31(4), pages 433-451.
    3. Chai, Yuan & Pannell, David J. & Pardey, Philip G., 2022. "Reducing Water Pollution from Nitrogen Fertilizer: Revisiting Insights from Production Economics," Staff Papers 320519, University of Minnesota, Department of Applied Economics.
    4. Scharin, Henrik & Ericsdotter, Siv & Elliott, Michael & Turner, R. Kerry & Niiranen, Susa & Blenckner, Thorsten & Hyytiäinen, Kari & Ahlvik, Lassi & Ahtiainen, Heini & Artell, Janne & Hasselström, Lin, 2016. "Processes for the sustainable stewardship of marine environments," Ecological Economics, Elsevier, vol. 128(C), pages 55-67.
    5. James Shortle & Richard D. Horan, 2017. "Nutrient Pollution: A Wicked Challenge for Economic Instruments," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-39, April.
    6. Ahlvik, Lassi & Hyytiäinen, Kari, 2015. "Value of adaptation in water protection — Economic impacts of uncertain climate change in the Baltic Sea," Ecological Economics, Elsevier, vol. 116(C), pages 231-240.
    7. Janne Artell & Anni Huhtala, 2017. "What Are the Benefits of the Water Framework Directive? Lessons Learned for Policy Design from Preference Revelation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(4), pages 847-873, December.
    8. Ahlvik, Lassi & Iho, Antti, 2018. "Optimal geoengineering experiments," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 148-168.
    9. Savitri Jetoo, 2019. "An Assessment of the Baltic Sea Action Plan (BSAP) Using the OECD Principles on Water Governance," Sustainability, MDPI, vol. 11(12), pages 1-23, June.
    10. Nurmi, Väinö & Ahtiainen, Heini, 2018. "Distributional Weights in Environmental Valuation and Cost-benefit Analysis: Theory and Practice," Ecological Economics, Elsevier, vol. 150(C), pages 217-228.
    11. Artell, Janne & Ahtiainen, Heini & Pouta, Eija, 2019. "Distance decay and regional statistics in international benefit transfer," Ecological Economics, Elsevier, vol. 164(C), pages 1-1.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hyytiainen, Kari & Ahlvik, Lassi & Ahtiainen, Heini & Artell, Janne & Dahlbo, Kim & Huhtala, Anni, 2013. "Spatially explicit bio-economic modelling for the Baltic Sea: Do the benefits of nutrient abatement outweigh the costs?," Discussion Papers 160728, MTT Agrifood Research Finland.
    2. Ahlvik, Lassi & Hyytiäinen, Kari, 2015. "Value of adaptation in water protection — Economic impacts of uncertain climate change in the Baltic Sea," Ecological Economics, Elsevier, vol. 116(C), pages 231-240.
    3. George HALKOS & Georgia GALANI, 2014. "Cost Effectiveness Analysis in Reducing Nutrient Loading in Baltic and Black Seas A Review," Journal of Advanced Research in Management, ASERS Publishing, vol. 5(1), pages 28-51.
    4. Elofsson, Katarina, 2014. "International knowledge diffusion and its impact on the cost-effective clean-up of the Baltic Sea," Working Paper Series 2014:06, Swedish University of Agricultural Sciences, Department Economics.
    5. Elofsson, Katarina & Gren, Ing-Marie, 2014. "Cost-efficient climate policies for interdependent and uncertain carbon pools," Working Paper Series 2014:7, Swedish University of Agricultural Sciences, Department Economics.
    6. Mikołaj Czajkowski & Ewa Zawojska & Norman Meade & Ronaldo Seroa da Motta & Mike Welsh & Ramon Arigoni Ortiz, 2022. "On the inference about willingness to pay distribution using contingent valuation data," Working Papers 2022-08, Faculty of Economic Sciences, University of Warsaw.
    7. Jan Siegmeier & Linus Mattauch & Max Franks & David Klenert & Anselm Schultes & Ottmar Edenhofer, 2015. "A Public Finance Perspective on Climate Policy: Six Interactions That May Enhance Welfare," Working Papers 2015.31, Fondazione Eni Enrico Mattei.
    8. Marshall Burke & Melanie Craxton & Charles D. Kolstad & Chikara Onda, 2016. "Some Research Challenges In The Economics Of Climate Change," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 1-14, May.
    9. Yingying Lu & David I. Stern, 2016. "Substitutability and the Cost of Climate Mitigation Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(1), pages 81-107, May.
    10. Czajkowski, Mikołaj & Ahtiainen, Heini & Artell, Janne & Meyerhoff, Jürgen, 2017. "Choosing a Functional Form for an International Benefit Transfer: Evidence from a Nine-country Valuation Experiment," Ecological Economics, Elsevier, vol. 134(C), pages 104-113.
    11. Simon Dietz & Nicholas Stern, 2014. "Endogenous growth, convexity of damages and climate risk: how Nordhaus� framework supports deep cuts in carbon emissions," GRI Working Papers 159, Grantham Research Institute on Climate Change and the Environment.
    12. Matteo Roggero & Leonhard Kähler & Achim Hagen, 2019. "Strategic cooperation for transnational adaptation: lessons from the economics of climate change mitigation," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 19(4), pages 395-410, October.
    13. Ralph Hippe, 2015. "Why did the knowledge transition occur in the West and not in the East? ICT and the role of governments in Europe, East Asia and the Muslim world," GRI Working Papers 180, Grantham Research Institute on Climate Change and the Environment.
    14. 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.
    15. Weyant John, 2014. "Integrated assessment of climate change: state of the literature," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(3), pages 377-409, December.
    16. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    17. Traeger, Christian, 2021. "ACE - Analytic Climate Economy," CEPR Discussion Papers 15968, C.E.P.R. Discussion Papers.
    18. George Economides & Anastasio Xepapadeas, 2019. "The effects of climate change on a small open economy," CESifo Working Paper Series 7582, CESifo.
    19. Stefan Dercon, 2014. "Climate change, green growth, and aid allocation to poor countries," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 30(3), pages 531-549.
    20. Richard S.J. Tol, 2021. "Estimates of the social cost of carbon have not changed over time," Working Paper Series 0821, Department of Economics, University of Sussex Business School.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:61:y:2015:i:2:p:217-241. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.