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Watershed-Based Effluent Trading: The Nonpoint Source Challenge

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  • KURT STEPHENSON
  • PATRICIA NORRIS
  • LEONARD SHABMAN

Abstract

In 1996 the Environmental Protection Agency released draft guidelines intended to encourage the development of watershed-based effluent trading systems. Effluent trading systems allow dischargers the opportunity to transfer legal and financial requirements for effluent control in order to lower control costs. To assure that equivalent control is being exchanged, accurate measurement (quantification) of effluent load is necessary. Many argue that measurement of nonpoint source load represents a significant challenge for designing and implementing effluent trading systems. A nonpoint source delivers effluent over a diffuse area. This paper argues that the physical properties of nonpoint source discharge may not offer as significant a barrier to trading as often is presumed. Many measurement challenges are not unique to nonpoint sources, and measurement issues are successfully addressed within a number of local and regional water quality programs. Trading system design can stimulate institutional and technical innovations in nonpoint source measurement. Copyright 1998 Western Economic Association International.

Suggested Citation

  • Kurt Stephenson & Patricia Norris & Leonard Shabman, 1998. "Watershed-Based Effluent Trading: The Nonpoint Source Challenge," Contemporary Economic Policy, Western Economic Association International, vol. 16(4), pages 412-421, October.
  • Handle: RePEc:bla:coecpo:v:16:y:1998:i:4:p:412-421
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    References listed on IDEAS

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    1. Foster, Vivien & Hahn, Robert W, 1995. "Designing More Efficient Markets: Lessons from Los Angeles Smog Control," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 19-48, April.
    2. Jane V. Hall & Amy L. Walton, 1996. "A Case Study In Pollution Markets: Dismal Science Vs. Dismal Reality," Contemporary Economic Policy, Western Economic Association International, vol. 14(2), pages 67-78, April.
    3. Richard L. Barrows & Bruce A. Prenguber, 1975. "Transfer of Development Rights: An Analysis of a New Land Use Policy Tool," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(4), pages 549-557.
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    Cited by:

    1. Revesz, Richard & Stavins, Robert, 2004. "Environmental Law and Policy," Working Paper Series rwp04-023, Harvard University, John F. Kennedy School of Government.
    2. Bosch, Darrell J. & Pease, James W. & Wieland, Robert & Parker, Doug, 2013. "Perverse Incentives with Pay for Performance: Cover Crops in the Chesapeake Bay Watershed," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 3), pages 1-17.
    3. Stavins, Robert, 2004. "Environmental Economics," Discussion Papers dp-04-54, Resources For the Future.
    4. repec:oup:revage:v:29:y:2007:i:2:p:201-215. is not listed on IDEAS
    5. Stavins, Robert, 2003. "Market-Based Environmental Policies: What Can We Learn from U.S. Experience (and Related Research)?," Discussion Papers dp-03-43, Resources For the Future.
    6. 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.
    7. Norris, Patricia E. & Brown, Elaine M. & Batie, Sandra S., 2002. "An Analysis Of Situation, Structure, Conduct And Performance In Air Emission And Watershed Effluent Markets," Staff Papers 11798, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    8. 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.
    9. 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).
    10. Catherine L. Kling, 2011. "Economic Incentives to Improve Water Quality in Agricultural Landscapes: Some New Variations on Old Ideas," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(2), pages 297-309.
    11. Hanna L. Breetz & Karen Fisher-Vanden & Hannah Jacobs & Claire Schary, 2005. "Trust and Communication: Mechanisms for Increasing Farmers’ Participation in Water Quality Trading," Land Economics, University of Wisconsin Press, vol. 81(2).
    12. 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).
    13. Shortle, James, 2013. "Economics and Environmental Markets: Lessons from Water-Quality Trading," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 1), pages 1-18, April.
    14. Ward, John & Bryan, Brett & Gale, Glenn & Hobbs, Trevor, 2006. "Market-Based Instrument approaches to implementing priority revegetation in the South Australian Murray-Darling Basin," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 139924, Australian Agricultural and Resource Economics Society.
    15. Stephenson, Kurt & Bosch, Darrell J., 2003. "Nonpoint Source And Carbon Sequestration Credit Trading: What Can The Two Learn From Each Other?," 2003 Annual meeting, July 27-30, Montreal, Canada 22229, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. 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.

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