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Tradable Discharge Permit System for Water Pollution: Case of the Upper Nanpan River of China

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  • Wendong Tao
  • Bo Zhou
  • William Barron
  • Weimin Yang

Abstract

A discharge permit system for water pollution of theupper Nanpan River has been tested since 1992. Thispaper proposed the shift of the current non-tradablepermits to tradable permits to attain the samepollution reduction targets at a lower cost. It wasfound that this river appeared good for trading. Apilot trading program for point sources was thenrecommended to a smaller trading zone. There would beten potential trades for chemical oxygen demanddischarge, gaining an annual cost-saving of ChineseYuan 2.4 million, or saving 18.4% of the total annualcost to attain the reduction target without trading.The marginal pollution reduction cost was estimated atChinese Yuan 959 for one kilogram chemical oxygendemand per day. Meanwhile, `without trading' and `withtrading' scenarios would bring about 900.9 kg/day and51.5 kg/day of redundant reduction respectively. Thenet annual benefit arising from trading, about ChineseYuan 1.6 million, would still be significant. At last,the study recommended that compliance monitoring andexecuting institution requirements be kept in mindwhile designing the program. An information systemneeds to be established to provide potentialparticipants relevant information. The method ofpermit allocation and lifespan of permits should alsobe addressed later. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Wendong Tao & Bo Zhou & William Barron & Weimin Yang, 2000. "Tradable Discharge Permit System for Water Pollution: Case of the Upper Nanpan River of China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(1), pages 27-38, January.
    • Handle: RePEc:kap:enreec:v:15:y:2000:i:1:p:27-38
    DOI: 10.1023/A:1008348400728
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    References listed on IDEAS

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    1. Oates, Wallace E & Portney, Paul R & McGartland, Albert M, 1989. "The Net Benefits of Incentive-Based Regulation: A Case Study of Environmental Standard Setting," American Economic Review, American Economic Association, vol. 79(5), pages 1233-1242, December.
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    1. Starodubrovskaya Irina & Slavgorodskaya Margarita & Nina Mironova, 2008. "Municipal Reform in 2007: Specifics of Implementation," Research Paper Series, Gaidar Institute for Economic Policy, issue 113P.
    2. Liang Liu & Cong Feng & Hongwei Zhang & Xuehua Zhang, 2015. "Game Analysis and Simulation of the River Basin Sustainable Development Strategy Integrating Water Emission Trading," Sustainability, MDPI, vol. 7(5), pages 1-21, April.
    3. Karousakis, Katia & Koundouri, Phoebe, 2006. "A Typology of Economic Instruments and Methods for Efficient Water Resources Management in Arid and Semi-Arid Regions," MPRA Paper 41909, University Library of Munich, Germany.
    4. Kampas, Athanasios & White, Ben, 2003. "Selecting permit allocation rules for agricultural pollution control: a bargaining solution," Ecological Economics, Elsevier, vol. 47(2-3), pages 135-147, December.
    5. Hung, Ming-Feng & Shaw, Daigee, 2005. "A trading-ratio system for trading water pollution discharge permits," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 83-102, January.

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