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Optimal Control of Nutrient Pollution in a Coastal Ecosystem: Agricultural Abatement versus Investment in Wastewater Treatment Capacity

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  • Laukkanen, Marita
  • Huhtala, Anni

Abstract

We examine in a dynamic framework how public resources should be allocated to small-scale water protection efforts in agriculture or alternatively to investments in large-scale waste water treatment plants to control point source loads. The building of waste water treatment capacity is characterized by high set-up costs as compared to the operating costs. We determine the optimal timing of investment, the rate of nutrient load reduction from point versus non-point sources, and the optimal switching policies from control of non-point pollution only to control of both non-point and point sources. The results of the analytical model are illustrated with simulation of optimal abatement policies for the Finnish coastal waters in the Gulf of Finland.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark with number 24451.

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Date of creation: 2005
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Handle: RePEc:ags:eaae05:24451

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Related research

Keywords: non-point source pollution; point-source pollution; timing of investment; Environmental Economics and Policy;

References

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  1. 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.
  2. Elofsson, Katarina, 2003. "Cost-effective reductions of stochastic agricultural loads to the Baltic Sea," Ecological Economics, Elsevier, vol. 47(1), pages 13-31, November.
  3. Hart, Rob, 2003. "Dynamic pollution control--time lags and optimal restoration of marine ecosystems," Ecological Economics, Elsevier, vol. 47(1), pages 79-93, November.
  4. 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.
  5. 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.
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Cited by:
  1. Constadina Passa & Anastasios Xepapadeas, 2008. "Regulation of Farming Activities: An Evolutionary Approach," Working Papers 0811, University of Crete, Department of Economics.

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