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Nutrient Allowances Market and Wetland Abatement

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  • Natacha Fauvet

    ()
    (GREThA)

  • Jean-Christophe Pereau

    ()
    (GREThA)

Abstract

The buffering function of wetlands is one of the most efficient mechanisms for regulating agricultural runoffs and water pollution. The aim of this paper is to show how farmers could use wetland abatement as a way to achieve pollution targets set by a regulator in a nutrient allowance market. The introduction of allowances into farmers’ maximisation programs creates an incentive to either reduce fertilizer use per hectare of crops, or to restore wetlands on agricultural land. Comparative statics results express a negative correlation between the quantity of allowances per farmer and the fertilizer use. Furthermore, the quantity of allowances per farmer is negatively correlated to the wetland surface area.

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File URL: http://www.faere.fr/pub/WorkingPapers/Fauvet_Pereau_FAERE_WP2014.06.pdf
File Function: First version, 2014
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Bibliographic Info

Paper provided by FAERE - French Association of Environmental and Resource Economists in its series Working Papers with number 2014.06.

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Length: 20 pages
Date of creation: May 2014
Date of revision: May 2014
Handle: RePEc:fae:wpaper:2014.06

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Web page: http://www.faere.fr
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Related research

Keywords: Nutrients; Wetlands; Agriculture; Permit market; Regulation; Allowances; Runoffs;

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  1. Ribaudo, Marc O. & Heimlich, Ralph & Claassen, Roger & Peters, Mark, 2001. "Least-cost management of nonpoint source pollution: source reduction versus interception strategies for controlling nitrogen loss in the Mississippi Basin," Ecological Economics, Elsevier, Elsevier, vol. 37(2), pages 183-197, May.
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  6. Cason, Timothy N. & Gangadharan, Lata & Duke, Charlotte, 2003. "A laboratory study of auctions for reducing non-point source pollution," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 46(3), pages 446-471, November.
  7. Jean-Christophe Pereau & Nicolas Sanz, 2011. "Bycatch ITQ Management in Oligopolistic Fisheries," Documents de Travail, CEREGMIA, Université des Antilles et de la Guyane 2011-05, CEREGMIA, Université des Antilles et de la Guyane.
  8. Kahn, James R. & Kemp, W. Michael, 1985. "Economic losses associated with the degradation of an ecosystem: The case of submerged aquatic vegetation in Chesapeake Bay," Journal of Environmental Economics and Management, Elsevier, Elsevier, vol. 12(3), pages 246-263, September.
  9. Bystrom, Olof & Andersson, Hans & Gren, Ing-Marie, 2000. "Economic criteria for using wetlands as nitrogen sinks under uncertainty," Ecological Economics, Elsevier, Elsevier, vol. 35(1), pages 35-45, October.
  10. Dionysis Latinopoulos & Eftichios Sartzetakis, 2011. "Optimal Exploitation of Groundwater and the Potential for a Tradable Permit System in Irrigated Agriculture," Working Papers, Fondazione Eni Enrico Mattei 2011.26, Fondazione Eni Enrico Mattei.
  11. Heberling, Matthew T. & García, Jorge H. & Thurston, Hale W., 2010. "Does encouraging the use of wetlands in water quality trading programs make economic sense?," Ecological Economics, Elsevier, Elsevier, vol. 69(10), pages 1988-1994, August.
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