IDEAS home Printed from https://ideas.repec.org/a/anr/reseco/v3y2011p355-373.html
   My bibliography  Save this article

The Economics of Non-Point-Source Pollution

Author

Listed:
  • Anastasios Xepapadeas

    (Department of International and European Economic Studies, Athens University of Economics and Business, 104 34 Athens, Greece)

Abstract

Non-point-source (NPS) pollution refers to a form of pollution in which neither the source nor the size of specific emissions can be observed or identified with sufficient accuracy. In NPS pollution the ambient concentration of pollutants associated with the individually unobserved emissions is typically observed. NPS pollution due to agricultural runoff is a major source of water pollution, eutrophication, and hypoxia. Due to informational asymmetries and stochastic effects, the use of traditional environmental policy instruments such as emissions taxes or tradable quotas to regulate NPS pollution is very difficult. This article reviews the main theoretical approaches, up to the present, to the regulation of NPS pollution—input-based schemes, ambient schemes, and endogenous monitoring—and discusses issues associated with NPS pollution regulation and their relation to the theoretically proposed instruments.

Suggested Citation

  • Anastasios Xepapadeas, 2011. "The Economics of Non-Point-Source Pollution," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 355-373, October.
  • Handle: RePEc:anr:reseco:v:3:y:2011:p:355-373
    as

    Download full text from publisher

    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-resource-083110-115945
    Download Restriction: Full text downloads are only available to subscribers. Visit the abstract page for more information.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435, Elsevier.
    2. Herriges Joseph A. & Govindasamy Ramu & Shogren Jason F., 1994. "Budget-Balancing Incentive Mechanisms," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 275-285, November.
    3. Lars Hansen, 1998. "A Damage Based Tax Mechanism for Regulation of Non-Point Emissions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(1), pages 99-112, July.
    4. Xepapadeas, A. P., 1995. "Observability and choice of instrument mix in the control of externalities," Journal of Public Economics, Elsevier, vol. 56(3), pages 485-498, March.
    5. Wu, JunJie & Babcock, Bruce A., 1999. "The Relative Efficiency of Voluntary vs Mandatory Environmental Regulations," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 158-175, September.
    6. Franckx, Laurent, 2002. "The Use of Ambient Inspections in Environmental Monitoring and Enforcement When the Inspection Agency Cannot Commit Itself to Announced Inspection Probabilities," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 71-92, January.
    7. Spraggon, John, 2002. "Exogenous targeting instruments as a solution to group moral hazards," Journal of Public Economics, Elsevier, vol. 84(3), pages 427-456, June.
    8. 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, vol. 46(3), pages 446-471, November.
    9. Lars Hansen, 2002. "Regulation of Non-Point Emissions – A Variance Based Mechanism," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(4), pages 303-316, April.
    10. 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.
    11. Jordan F. Suter & Christian A. Vossler & Gregory L. Poe & Kathleen Segerson, 2008. "Experiments on Damage-Based Ambient Taxes for Nonpoint Source Polluters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 86-102.
    12. Roy, Nilanjana & Cornelis van Kooten, G., 2004. "Another look at the income elasticity of non-point source air pollutants: a semiparametric approach," Economics Letters, Elsevier, vol. 85(1), pages 17-22, October.
    13. Millock, Katrin & Sunding, David & Zilberman, David, 2002. "Regulating Pollution with Endogenous Monitoring," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 221-241, September.
    14. James Shortle & David Abler & Richard Horan, 1998. "Research Issues in Nonpoint Pollution Control," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 571-585, April.
    15. Y. Farzin & Jonathan Kaplan, 2004. "Nonpoint Source Pollution Control under Incomplete and Costly Information," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(4), pages 489-506, August.
    16. Hansen, Lars Garn & Romstad, Eirik, 2007. "Non-point source regulation -- A self-reporting mechanism," Ecological Economics, Elsevier, vol. 62(3-4), pages 529-537, May.
    17. Karl-Göran Mäler & Anastasios Xepapadeas & Aart de Zeeuw, 2003. "The Economics of Shallow Lakes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(4), pages 603-624, December.
    18. Kaplan, Jonathan D. & Howitt, Richard E. & Farzin, Y. Hossein, 2003. "An information-theoretical analysis of budget-constrained nonpoint source pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 46(1), pages 106-130, July.
    19. Horan, Richard D. & Shortle, James S. & Abler, David G., 1998. "Ambient Taxes When Polluters Have Multiple Choices," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 186-199, September.
    20. Segerson, Kathleen, 1988. "Uncertainty and incentives for nonpoint pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 87-98, March.
    21. Suter, Jordan F. & Vossler, Christian A. & Poe, Gregory L. & Segerson, Kathleen, 2008. "AJAE Appendix: Experiments on Damage-Based Ambient Taxes for Nonpoint Source Polluters," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 90(1), pages 1-14, February.
    22. Xepapadeas, A. P., 1992. "Environmental policy design and dynamic nonpoint-source pollution," Journal of Environmental Economics and Management, Elsevier, vol. 23(1), pages 22-39, July.
    23. Athanasios Kampas & Ben White, 2004. "Administrative Costs and Instrument Choice for Stochastic Non-point Source Pollutants," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(2), pages 109-133, February.
    24. François Cochard & Marc Willinger & Anastasios Xepapadeas, 2005. "Efficiency of Nonpoint Source Pollution Instruments: An Experimental Study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(4), pages 393-422, April.
    25. Jones, Kristin Roti & Corona, Joel P., 2008. "An ambient tax approach to invasive species," Ecological Economics, Elsevier, vol. 64(3), pages 534-541, January.
    26. Xepapadeas, A. P., 1991. "Environmental policy under imperfect information: Incentives and moral hazard," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 113-126, March.
    27. Spraggon, John, 2004. "Testing ambient pollution instruments with heterogeneous agents," Journal of Environmental Economics and Management, Elsevier, vol. 48(2), pages 837-856, September.
    28. Robert D. Weaver, 1996. "Prosocial Behavior: Private Contributions to Agriculture's Impact on the Environment," Land Economics, University of Wisconsin Press, vol. 72(2), pages 231-247.
    29. Christian A. Vossler & Gregory L. Poe & William D. Schulze & Kathleen Segerson, 2006. "Communication and Incentive Mechanisms Based on Group Performance: An Experimental Study of Nonpoint Pollution Control," Economic Inquiry, Western Economic Association International, vol. 44(4), pages 599-613, October.
    30. Larry Karp, 2005. "Nonpoint Source Pollution Taxes and Excessive Tax Burden," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(2), pages 229-251, June.
    31. Francisco Alpízar & Till Requate & Albert Schram, 2004. "Collective versus Random Fining: An Experimental Study on Controlling Ambient Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(2), pages 231-252, October.
    32. Cabe, Richard & Herriges, Joseph A., 1992. "The regulation of non-point-source pollution under imperfect and asymmetric information," Journal of Environmental Economics and Management, Elsevier, vol. 22(2), pages 134-146, March.
    33. Kossioris, G. & Plexousakis, M. & Xepapadeas, A. & de Zeeuw, A. & Mäler, K.-G., 2008. "Feedback Nash equilibria for non-linear differential games in pollution control," Journal of Economic Dynamics and Control, Elsevier, vol. 32(4), pages 1312-1331, April.
    34. Armin Schmutzler, 1996. "Pollution control with imperfectly observable emissions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 7(3), pages 251-262, April.
    35. Timothy N. Cason & Lata Gangadharan, 2005. "A Laboratory Comparison of Uniform and Discriminative Price Auctions for Reducing Non-point Source Pollution," Land Economics, University of Wisconsin Press, vol. 81(1).
    36. Vatn, Arild, et al, 1997. "Regulating Nonpoint-," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 24(2), pages 207-229.
    37. Suter, Jordan F. & Vossler, Christian A. & Poe, Gregory L., 2009. "Ambient-based pollution mechanisms: A comparison of homogeneous and heterogeneous groups of emitters," Ecological Economics, Elsevier, vol. 68(6), pages 1883-1892, April.
    38. Romstad, Eirik, 2003. "Team approaches in reducing nonpoint source pollution," Ecological Economics, Elsevier, vol. 47(1), pages 71-78, November.
    39. Chambers, Robert G. & Quiggin, John, 1996. "Non-point-source pollution regulation as a multi-task principal-agent problem," Journal of Public Economics, Elsevier, vol. 59(1), pages 95-116, January.
    40. Ribaudo, Marc O. & Heimlich, Ralph & Peters, Mark, 2005. "Nitrogen sources and Gulf hypoxia: potential for environmental credit trading," Ecological Economics, Elsevier, vol. 52(2), pages 159-168, January.
    41. Hyde, Charles E & Rausser, Gordon C & Simon, Leo K, 2000. "Regulating Multiple Polluters: Deterrence and Liability Allocation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 495-521, May.
    42. Lyubov Kurkalova & Catherine Kling & Jinhua Zhao, 2004. "Value of agricultural non-point source pollution measurement technology: assessment from a policy perspective," Applied Economics, Taylor & Francis Journals, vol. 36(20), pages 2287-2298.
    43. 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, vol. 37(2), pages 183-197, May.
    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. Griesinger, Mark R. & Palm-Forster, Leah H. & Messer, Kent D. & Butler, Julianna & Fooks, Jacob, 2017. "Stewardship signaling and the power of using social pressures to reduce nonpoint source pollution," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259153, Agricultural and Applied Economics Association.
    2. Emmanuelle Augeraud-Véron & Catherine Choquet & Éloïse Comte, 2017. "Optimal Control for a Groundwater Pollution Ruled by a Convection–Diffusion–Reaction Problem," Journal of Optimization Theory and Applications, Springer, vol. 173(3), pages 941-966, June.
    3. Hansen, Lars Gårn, 2020. "A Montero payment mechanism for regulating non-point pollution emissions," Resource and Energy Economics, Elsevier, vol. 61(C).
    4. J. Walter Milon, 2019. "The polluter pays principle and Everglades restoration," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 9(1), pages 67-81, March.
    5. Nery, Thayse & Polyakov, Maksym & Sadler, Rohan & White, Ben, 2019. "Spatial patterns of boom and bust forestry investment development: A case study from Western Australia," Land Use Policy, Elsevier, vol. 86(C), pages 67-77.
    6. Grenestam, Erik & Nordin, Martin, 2018. "Estimating the impact of agri-environmental payments on nutrient runoff using a unique combination of data," Land Use Policy, Elsevier, vol. 75(C), pages 388-398.
    7. Dieter Schmidtchen & Jenny Helstroffer & Christian Koboldt, 2021. "Regulatory failure and the polluter pays principle: why regulatory impact assessment dominates the polluter pays principle," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(1), pages 109-144, January.
    8. 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.
    9. Wu, Shang & Palm-Forster, Leah H. & Messer, Kent D., 2021. "Impact of peer comparisons and firm heterogeneity on nonpoint source water pollution: An experimental study," Resource and Energy Economics, Elsevier, vol. 63(C).
    10. James Shortle & Richard D. Horan, 2017. "Nutrient Pollution: A Wicked Challenge for Economic Instruments," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-39, April.
    11. Kathleen Segerson, 2013. "Voluntary Approaches to Environmental Protection and Resource Management," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 161-180, June.
    12. Mark Agerton & Ben Gilbert & Gregory B. Upton Jr., 2021. "The Economics of Natural Gas Venting, Flaring and Leaking in U.S. Shale: An Agenda for Research and Policy," Working Papers 2021-02, Colorado School of Mines, Division of Economics and Business.
    13. Zhang, Fan & Fogarty, James, 2015. "Nonmarket Valuation of Water Sensitive Cities: Current Knowledge and Issues," Working Papers 207694, University of Western Australia, School of Agricultural and Resource Economics.
    14. Michail Tsagris & Vangelis Tzouvelekas, 2021. "Nitrate Pollution and Efficiency Measurement in Intensive Farming Systems: A Parametric By-Production Technology Approach," Working Papers 2101, University of Crete, Department of Economics.

    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. Suter, Jordan F. & Vossler, Christian A. & Poe, Gregory L., 2009. "Ambient-based pollution mechanisms: A comparison of homogeneous and heterogeneous groups of emitters," Ecological Economics, Elsevier, vol. 68(6), pages 1883-1892, April.
    2. Gaston Giordana & Marc Willinger, 2013. "Regulatory instruments for monitoring ambient pollution," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 7, pages 193-232, Edward Elgar Publishing.
    3. 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.
    4. Jordan F. Suter & Kathleen Segerson & Christian A. Vossler & Gregory L. Poe, 2010. "Voluntary-Threat Approaches to Reduce Ambient Water Pollution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1195-1213.
    5. Wu, Shang & Palm-Forster, Leah H. & Messer, Kent D., 2021. "Impact of peer comparisons and firm heterogeneity on nonpoint source water pollution: An experimental study," Resource and Energy Economics, Elsevier, vol. 63(C).
    6. Marc Willinger & Nasreddine Ammar & Ahmed Ennasri, 2014. "Performance of the Ambient Tax: Does the Nature of the Damage Matter?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(3), pages 479-502, November.
    7. Colson, Gregory & Menapace, Luisa, 2012. "Multiple receptor ambient monitoring and firm compliance with environmental taxes under budget and target driven regulatory missions," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 390-401.
    8. Larry Karp, 2005. "Nonpoint Source Pollution Taxes and Excessive Tax Burden," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(2), pages 229-251, June.
    9. François Cochard & Marc Willinger & Anastasios Xepapadeas, 2005. "Efficiency of Nonpoint Source Pollution Instruments: An Experimental Study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(4), pages 393-422, April.
    10. Hansen, Lars Gårn, 2020. "A Montero payment mechanism for regulating non-point pollution emissions," Resource and Energy Economics, Elsevier, vol. 61(C).
    11. Christian A. Vossler & Gregory L. Poe & William D. Schulze & Kathleen Segerson, 2006. "Communication and Incentive Mechanisms Based on Group Performance: An Experimental Study of Nonpoint Pollution Control," Economic Inquiry, Western Economic Association International, vol. 44(4), pages 599-613, October.
    12. Suter, Jordan F. & Vossler, Christian A. & Poe, Gregory L. & Schulze, William D. & Segerson, Kathleen, 2006. "An Experimental Exploration of a Voluntary Mechanism to Reduce Nonpoint Source Water Pollution with a Background Threat of Regulation," 2006 Annual meeting, July 23-26, Long Beach, CA 21416, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. 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.
    14. Millock, Katrin & Xabadia, Angels & Zilberman, David, 2012. "Policy for the adoption of new environmental monitoring technologies to manage stock externalities," Journal of Environmental Economics and Management, Elsevier, vol. 64(1), pages 102-116.
    15. Hamet Sarr & Mohamed Bchir & Francois Cochard & Anne Rozan, 2016. "Nonpoint source pollution: An experimental investigation of the Average Pigouvian Tax," Working Papers hal-01375078, HAL.
    16. Hamet SARR & Mohamed Ali BCHIR & François COCHARD & Anne ROZAN, 2016. "Nonpoint source pollution: An experimental investigation of the Average Pigouvian Tax," Working Papers 2016-05, CRESE.
    17. Katrin Millock & Angels Xabadia & David Zilberman, 2009. "Investment Policy for New Environmental Monitoring Technologies to Manage Stock Externalities," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00367888, HAL.
    18. Rodriguez, Luz A. & Pfaff, Alexander & Velez, Maria Alejandra, 2019. "Graduated stringency within collective incentives for group environmental compliance: Building coordination in field-lab experiments with artisanal gold miners in Colombia," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    19. François Cochard & Julie Le Gallo & Laurent Franckx, 2015. "Regulation Of Pollution In The Laboratory: Random Inspections, Ambient Inspections, And Commitment Problems," Bulletin of Economic Research, Wiley Blackwell, vol. 67(S1), pages 40-73, December.
    20. Vossler, Christian A. & Poe, Gregory L. & Schulze, William D. & Segerson, Kathleen, 2002. "An Experimental Test of Ambient-Based Mechanisms for Nonpoint Source Pollution Control," Working Papers 127334, Cornell University, Department of Applied Economics and Management.

    More about this item

    Keywords

    diffused source pollution; input-based schemes; ambient schemes; endogenous monitoring; moral hazard; uncertainty;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • 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

    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:anr:reseco:v:3:y:2011:p:355-373. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.annualreviews.org .

    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: http://www.annualreviews.org (email available below). General contact details of provider: http://www.annualreviews.org .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.