Schemes to Regulate Non-Point Water Pollution: Making Sense of Experimental Results
AbstractThree theoretical non-point water pollution control schemes were tested repeatedly in experimental studies tax-subsidy scheme (K. Segerson, 1988), collective fining (Xepapadeas, 1991) and random fining (Xepapadeas, 1991). Camacho and Requate (2004) summarized results reported by Spraggon (2002), Vossler et al (2002), Cochard et al (2002), and Alpizar et al (2004) and replicated their experiments. In this paper I will discuss similarity and differences among all the reported results and in particular the following two. First, both collective fining and random fining induce abatement under the target, their performance deteriorates over time, and is relatively consistent over the replications. Second, tax-subsidy scheme induced abatement over the target, its performance is consistent over time, but not over the replications. Three different theories offer an explanation of how individuals behave as members of a group: non-cooperative game theory (individuals choose to maximize their individual profits), cooperative game theory (individuals within a group choose a coalition that would maximize profit of each member of the coalition), evolutionary game theory (individuals choose to maximize their relative profits difference between individual profit and average profit in the group). Each of these theories suggests a specific equilibrium for each of the nonpoint control schemes mentioned above, but individually does not explain experimental results. I will demonstrate that multi-objective optimization, where individuals are interested in maximizing a bundle (individual profit; payoff from a coalition, relative profit) is consistent with experimental data and accounts for recognized individual differences in players within a group (i.e. Kurzban & Houser, 2005).
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Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia with number 25507.
Date of creation: 2006
Date of revision:
Environmental Economics and Policy;
Other versions of this item:
- Pushkarskaya, Helen N., 2006. "Schemes to Regulate Non-Point Water Pollution: Making Sense of Experimental Results," 2006 Annual meeting, July 23-26, Long Beach, CA 21111, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Francisco Alpízar & Till Requate & Albert Schram, 2004. "Collective versus Random Fining: An Experimental Study on Controlling Ambient Pollution," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 29(2), pages 231-252, October.
- Spraggon, John, 2002.
"Exogenous targeting instruments as a solution to group moral hazards,"
Journal of Public Economics,
Elsevier, vol. 84(3), pages 427-456, June.
- John Spraggon, 1998. "Exogenous Targeting Instruments as a Solution to Group Moral Hazards," Department of Economics Working Papers 1998-01, McMaster University.
- Camacho Cuena, Eva & Requate, Till, 2004. "Collective and Random Fining versus Tax/Subsidy - Schemes to Regulate Non-Point Pollution : An Experimental Study," Economics Working Papers 2004,10, Christian-Albrechts-University of Kiel, Department of Economics.
- François Cochard & Marc Willinger & Anastasios Xepapadeas, 2002. "Efficiency of Nonpoint Source Pollution Instruments with Externality Among Polluters:An Experimental Study," Working Papers of BETA 2002-20, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
- Vossler, Christian A. & Poe, Gregory L. & Schulze, William D. & Segerson, Kathleen, 2002. "An Experimental Test of Ambient-Based Mechanisms for Nonpoint Source Pollution Control," Working Papers 127334, Cornell University, Department of Applied Economics and Management.
- François Cochard & Marc Willinger & Anastasios Xepapadeas, 2005. "Efficiency of Nonpoint Source Pollution Instruments: An Experimental Study," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 30(4), pages 393-422, 04.
- Segerson, Kathleen, 1988. "Uncertainty and incentives for nonpoint pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 87-98, March.
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