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Modeling Transactions Costs in a Regional Transferable Discharge Permit System for Phosphorus Runoff

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  • Mitchell, David M.
  • Willett, Keith

Abstract

This paper examines the construction and implementation of a regional transferable discharge permit system for phosphorus runoff from agricultural-related sources. The impact on behavior at the firm level is also examined. Results indicate that firms may respond to binding environmental constraints by both engaging in the trade of discharge permits and decreasing the output that can cause phosphorus runoff. The criticisms within the literature of building transferable discharge permit systems that ignore transactions costs are also addressed.

Suggested Citation

  • Mitchell, David M. & Willett, Keith, 2012. "Modeling Transactions Costs in a Regional Transferable Discharge Permit System for Phosphorus Runoff," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 0(Issue 2), pages 1-13.
  • Handle: RePEc:ags:jrapmc:143774
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    File URL: http://ageconsearch.umn.edu/record/143774/files/12-2-3.pdf
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    References listed on IDEAS

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    1. 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.
    2. Thomas H. Tietenberg, 1980. "Transferable Discharge Permits and the Control of Stationary Source Air Pollution: A Survey and Synthesis," Land Economics, University of Wisconsin Press, vol. 56(4), pages 391-416.
    3. O'Neil, William & David, Martin & Moore, Christina & Joeres, Erhard, 1983. "Transferable discharge permits and economic efficiency: The fox river," Journal of Environmental Economics and Management, Elsevier, vol. 10(4), pages 346-355, December.
    4. Ralph Luken & Lyman Clark, 1991. "How efficient are national environmental standards? A benefit-cost analysis of the United States experience," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 1(4), pages 385-413, December.
    5. Keith Willett & David Mitchell & H. L. Goodwin & Baxter Vieux & Jennie Popp, 2006. "The opportunity cost of regulating phosphorus from broiler production in the Illinois River Basin," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 49(2), pages 181-207.
    6. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521311120.
    7. Knoeber, Charles R & Thurman, Walter N, 1994. "Testing the Theory of Tournaments: An Empirical Analysis of Broiler Production," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 155-179, April.
    8. Govindasamy, Ramu & Cochran, Mark J., 1995. "Implications of alternative environmental policies on phosphorus loading from poultry litter," Agricultural Economics, Blackwell, vol. 13(2), pages 137-148, November.
    9. James J. Opaluch & Richard M. Kashmanian, 1985. "Assessing the Viability of Marketable Permit Systems: An Application in Hazardous Waste Management," Land Economics, University of Wisconsin Press, vol. 64(3), pages 263-271.
    10. Robert N. Stavins, 1998. "What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 69-88, Summer.
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    Cited by:

    1. Dionisios Latinopoulos & Eftichios S. Sartzetakis, 2015. "Using Tradable Water Permits in Irrigated Agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(3), pages 349-370, March.

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