When Should Uncertain Nonpoint Emissions be Penalized in a Trading Program?
AbstractWhen nonpoint source pollution is stochastic and the damage function is convex, intuition might suggest it is more important to control a nonpoint pollution source than a point source. Earlier research has provided sufficient conditions such that the permit price for a unit of ex-ante expected emissions should be higher than the permit price for a unit of certain emissions. Herein we provide a set of necessary and sufficient conditions such that this is the case. An approach to testing for the validity of the condition set is available, and has been applied to a related problem.
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Bibliographic InfoPaper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN with number 9805.
Date of creation: 2007
Date of revision:
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agricultural pollution; multiple inputs; permit trading; social optimality; trading ratio; water quality; Environmental Economics and Policy; Q1; Q2; D2; D8;
Other versions of this item:
- David A. Hennessy & Hongli Feng, 2008. "When Should Uncertain Nonpoint Emissions Be Penalized in a Trading Program?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 249-255.
- Hennessy, David A. & Feng, Hongli, 2008. "When Should Uncertain Nonpoint Emissions Be Penalized in a Trading Program?," Staff General Research Papers 12868, Iowa State University, Department of Economics.
- Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
- D2 - Microeconomics - - Production and Organizations
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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- Hanson, James C. & McConnell, Kenneth E., 2008. "Simulated Trading for Maryland's Nitrogen Loadings in the Chesapeake Bay," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(2), October.
- Ghosh, Gaurav & Shortle, James, 2012. "Managing Pollution Risk through Emissions Trading," FCN Working Papers 1/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
- Smith, Craig M. & Peterson, Jeffrey M. & Leatherman, John C. & Williams, Jeffery R., 2012. "A Simulation of Factors Impeding Water Quality Trading," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 42(2).
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