IDEAS home Printed from https://ideas.repec.org/a/ags/arerjl/45669.html
   My bibliography  Save this article

Simulated Trading for Maryland's Nitrogen Loadings in the Chesapeake Bay

Author

Listed:
  • Hanson, James C.
  • McConnell, Kenneth E.

Abstract

We investigate nutrient trading for point and non-point sources for the Bay Restoration Fund in Maryland. We demonstrate how to use the proceeds from the tax revenue to mimic a market by trading high-cost upgrades of sewage treatment plants for low-cost winter cover crops. Under an optimistic assumption about costs for non-point sources and naïve assumptions about the lag from planting cover crops to changes in nitrogen load, we calculate that 100 percent of abatement could be achieved at 56 percent of total costs, while in a pessimistic scenario, 100 percent of abatement could be could be achieved at 83 percent of total costs.

Suggested Citation

  • Hanson, James C. & McConnell, Kenneth E., 2008. "Simulated Trading for Maryland's Nitrogen Loadings in the Chesapeake Bay," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(2), pages 1-16.
    • Handle: RePEc:ags:arerjl:45669
    DOI: 10.22004/ag.econ.45669
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/45669/files/hanson%20-%20current.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.45669?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. David A. Hennessy & Hongli Feng, 2008. "When Should Uncertain Nonpoint Emissions Be Penalized in a Trading Program?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 249-255.
    2. Arun S. Malik & David Letson & Stephen R. Crutchfield, 1993. "Point/Nonpoint Source Trading of Pollution Abatement: Choosing the Right Trading Ratio," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(4), pages 959-967.
    3. Richard D. Horan, 2001. "Differences in Social and Public Risk Perceptions and Conflicting Impacts on Point/Nonpoint Trading Ratios," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 934-941.
    4. Shortle, James S., 1987. "Allocative Implications Of Comparisons Between The Marginal Costs Of Point And Nonpoint Source Pollution Abatement," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 16(1), pages 1-7, April.
    5. Richard Schmalensee & Paul L. Joskow & A. Denny Ellerman & Juan Pablo Montero & Elizabeth M. Bailey, 1998. "An Interim Evaluation of Sulfur Dioxide Emissions Trading," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 53-68, Summer.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stephenson, Kurt & Aultman, Stephen & Metcalfe, Todd & Miller, Alex, 2009. "An Evaluation of Nutrient Trading Options in Virginia: A Role for Agriculture?," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46779, Southern Agricultural Economics Association.
    2. Movafaghi, Olivia S. & Stephenson, Kurt & Taylor, Daniel, 2013. "Farmer Response to Nutrient Credit Trading Opportunities in the Coastal Plain of Virginia," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150414, Agricultural and Applied Economics Association.
    3. Geret S. DePiper & Douglas W. Lipton & Romuald N. Lipcius, 2017. "Valuing Ecosystem Services: Oysters, Denitrification, and Nutrient Trading Programs," Marine Resource Economics, University of Chicago Press, vol. 32(1), pages 1-20.
    4. Duke, Joshua M. & Liu, Hongxing & Monteith, Tyler & McGrath, Joshua & Fiorellino, Nicole M., 2020. "A method for predicting participation in a performance-based water quality trading program," Ecological Economics, Elsevier, vol. 177(C).
    5. Wainger, Lisa A. & Van Houtven, George & Loomis, Ross & Messer, Jay & Beach, Robert H. & Deerhake, Marion, 2013. "Tradeoffs among Ecosystem Services, Performance Certainty, and Cost-efficiency in Implementation of the Chesapeake Bay Total Maximum Daily Load," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(1), pages 1-29, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ghosh, Gaurav & Shortle, James, 2012. "Managing Pollution Risk through Emissions Trading," FCN Working Papers 1/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    2. 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.
    3. Woodward, Richard T., 2001. "The Environmentally Optimal Trading Ratio," 2001 Annual meeting, August 5-8, Chicago, IL 20491, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Hanson, James C. & McConnell, Kenneth E., 2007. "Nutrient Trading, the Flush Tax, and Maryland's Nitrogen Emissions to the Chesapeake Bay," Working Papers 7343, University of Maryland, Department of Agricultural and Resource Economics.
    5. 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.
    6. Horowitz, John K. & Just, Richard E., 2013. "Economics of additionality for environmental services from agriculture," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 105-122.
    7. Smith, Craig M. & Peterson, Jeffrey M. & Leatherman, John C. & Williams, Jeffery R., 2012. "A Simulation of Factors Impeding Water Quality Trading," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 42(2), pages 1-15.
    8. Yusuke Kuwayama & Nicholas Brozović, 2017. "Optimal Management of Environmental Externalities with Time Lags and Uncertainty," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(3), pages 473-499, November.
    9. Horan, Richard D. & Shortle, James S. & Abler, David G. & Ribaudo, Marc, 2001. "The Design And Comparative Economic Performance Of Alternative Second-Best Point/Nonpoint Trading Markets," Staff Paper Series 11595, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    10. Shortle, James, 2013. "Economics and Environmental Markets: Lessons from Water-Quality Trading," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(1), pages 1-18, April.
    11. Baerenklau, Kenneth A., 2002. "Green Payment Programs For Nonpoint Source Pollution Control: How Important Is Targeting For Cost-Effectiveness?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(2), pages 1-14, December.
    12. Greenhalgh, Suzie & Selman, Mindy, 2012. "Comparing Water Quality Trading Programs: What Lessons Are There To Learn?," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 42(2), pages 1-22.
    13. Letson, David & Crutchfield, Stephen & Malik, Arun, 1993. "Point-Nonpoint Source Trading for Managing Agricultural Pollutant Loadings: Prospects for Coastal Watersheds," Agricultural Economic Reports 308279, United States Department of Agriculture, Economic Research Service.
    14. Sheila M. Olmstead, 2010. "The Economics of Water Quality," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(1), pages 44-62, Winter.
    15. Sergey Rabotyagov & Hongli Feng & Catherine L. Kling, 2006. "Optimal Design of Permit Markets with an Ex Ante Pollution Target," Center for Agricultural and Rural Development (CARD) Publications 06-wp430, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    16. Fleming, Patrick & Lichtenberg, Erik & Newburn, David, 2018. "Water Quality Trading Program Design with Heterogeneous Behavioral Responses," 2018 Annual Meeting, August 5-7, Washington, D.C. 274429, Agricultural and Applied Economics Association.
    17. Heather Klemick, 2012. "What is the Optimal Offsets Discount under a Second-Best Cap & Trade Policy?," NCEE Working Paper Series 201204, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jul 2012.
    18. Moledina, Amyaz A., 2001. "Comparing Policy Instruments in a Dynamic Environment with Strategic Firms: The Case of Minnesota Phosphorus Emissions," 2001 Annual meeting, August 5-8, Chicago, IL 20751, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Zhao, Xiaobing & Fletcher, Jerald J., 2005. "Examining Point-Nonpoint Trading Ratios for Acid Mine Drainage Remediation with a Spatial-Temporal Optimization Model," 2005 Annual meeting, July 24-27, Providence, RI 19231, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Zhao, Xiaobing & Fletcher, Jerald J., 2004. "An Optimal Control Approach To Water Quality Trading: Cost-Effective Point/Nonpoint Management In A Watershed Framework," 2004 Annual meeting, August 1-4, Denver, CO 20195, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    Keywords

    Environmental Economics and Policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:arerjl:45669. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/nareaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.