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Tradable Permits under Threat to Manage Nonpoint Source Pollution

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  • Mourad Ali
  • Patrick Rio
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    Abstract

    In this article we treat the problemof nonpoint source pollution as a problem of moral hazard in group. To solve this kind of problem we consider a group performance based tax coupled to tradable permits market. The tax is activated if the group fails to meet the ambient standard. So the role of the tax is to provide an incentive to ensure that the agents provide the abatement level necessary to achieve the standard. The role of the tradable permits market is to distribute effectively this abatement level through the price of the permits which rises with the exchange of the permits.

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    File URL: http://www.lameta.univ-montp1.fr/Documents/DR2009-21.pdf
    File Function: First version, 2009
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    Bibliographic Info

    Paper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 09-21.

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    Length: 11 pages
    Date of creation: Dec 2009
    Date of revision: Dec 2009
    Handle: RePEc:lam:wpaper:09-21

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    1. Fran├žois 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.
    2. Spraggon, John, 2004. "Testing ambient pollution instruments with heterogeneous agents," Journal of Environmental Economics and Management, Elsevier, vol. 48(2), pages 837-856, September.
    3. Segerson, Kathleen & Wu, JunJie, 2006. "Nonpoint pollution control: Inducing first-best outcomes through the use of threats," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 165-184, March.
    4. Gregory L. Poe & William D. Schulze & Kathleen Segerson & Jordan F. Suter & Christian A. Vossler, 2004. "Exploring the Performance of Ambient-Based Policy Instruments When Nonpoint Source Polluters Can Cooperate," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1203-1210.
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