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Moving Pollution Trading from Air to Water: Potential, Problems, and Prognosis

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  • Karen Fisher-Vanden
  • Sheila Olmstead

Abstract

This paper seeks to assess the current status of water quality trading and to identify possible problems and solutions. Water pollution permit trading programs have rarely been comprehensively described and analyzed in the peer-reviewed literature. Including active programs and completed or otherwise inactive programs, we identify approximately three dozen initiatives. We describe six criteria for successful pollution trading programs and consider how these apply to standard water quality problems, as compared to air quality. We then highlight some important issues to be resolved if current water quality trading programs are to function as the "leading edge" of a new frontier in cost-effective pollution permit trading in the United States.

Suggested Citation

  • Karen Fisher-Vanden & Sheila Olmstead, 2013. "Moving Pollution Trading from Air to Water: Potential, Problems, and Prognosis," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 147-172, Winter.
  • Handle: RePEc:aea:jecper:v:27:y:2013:i:1:p:147-72
    Note: DOI: 10.1257/jep.27.1.147
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.27.1.147
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    Citations

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    Cited by:

    1. Frans P. Vries & Nick Hanley, 2016. "Incentive-Based Policy Design for Pollution Control and Biodiversity Conservation: A Review," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 687-702, April.
    2. Vincent Paul Obade & Rattan Lal & Richard Moore, 2014. "Assessing the Accuracy of Soil and Water Quality Characterization Using Remote Sensing," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(14), pages 5091-5109, November.
    3. Valcu, Adriana & Rabotyagov, Sergey S. & Kling, Catherine L., 2013. "Flexible Practice-Based Approaches For Controlling Multiple Agricultural Nonpoint-Source Water Pollution," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150450, Agricultural and Applied Economics Association.
    4. Cloé Garnache & Scott M. Swinton & Joseph A. Herriges & Frank Lupi & R. Jan Stevenson, 2016. "Solving the Phosphorus Pollution Puzzle: Synthesis and Directions for Future Research," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1334-1359.
    5. repec:kap:enreec:v:68:y:2017:i:3:d:10.1007_s10640-016-0026-2 is not listed on IDEAS
    6. repec:wsi:wepxxx:v:03:y:2017:i:02:n:s2382624x17710047 is not listed on IDEAS
    7. Call, Isabel L. & Lew, Daniel K., 2015. "Tradable permit programs: What are the lessons for the new Alaska halibut catch sharing plan?," Marine Policy, Elsevier, vol. 52(C), pages 125-137.
    8. Horan, Richard & Shortle, James, 2014. "Point-Nonpoint Heresy?! An Endogenous Risk Explanation for Point-Nonpoint Trading Ratios Less than One," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170274, Agricultural and Applied Economics Association.
    9. repec:spr:waterr:v:31:y:2017:i:8:d:10.1007_s11269-016-1391-x is not listed on IDEAS
    10. Zhao, Tianli & Poe, Gregory L. & Boisvert, Richard N., 2015. "Management Areas and Fixed Costs in the Economics of Water Quality Trading," Working Papers 250017, Cornell University, Department of Applied Economics and Management.
    11. Peifang Yang & Daniel T. Kaffine, 2016. "Community-Based Tradable Permits for Localized Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 773-788, December.
    12. repec:bla:ecanth:v:4:y:2017:i:2:p:225-238 is not listed on IDEAS
    13. Olmstead, Sheila & Richardson, Nathan, 2014. "Managing the Risks of Shale Gas Development Using Innovative Legal and Regulatory Approaches," Discussion Papers dp-14-15, Resources For the Future.
    14. Valcu, Adriana Mihaela, 2013. "Agricultural nonpoint source pollution and water quality trading: empirical analysis under imperfect cost information and measurement error," ISU General Staff Papers 201301010800004451, Iowa State University, Department of Economics.
    15. James Shortle & Richard D. Horan, 2013. "Policy Instruments for Water Quality Protection," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 111-138, June.
    16. repec:wsi:wepxxx:v:03:y:2017:i:02:n:s2382624x16500338 is not listed on IDEAS

    More about this item

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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