Administrative Costs and Instrument Choice for Stochastic Non-point Source Pollutants

This paper extends the empiricalanalysis of non-point source pollution to thecase where the pollutant is stochastic andalternative regulatory instruments havedifferent administrative costs. It also appliesa method of stochastic programming whereemissions are log-normally distributed. Forthe Kennet catchment in South West England werank a range of policies in terms of abatementcosts alone, and total costs (abatement andadministrative costs). On the basis ofabatement costs alone, a uniform emission taxis the cost minimising policy, but on the basisof total cost a nitrogen input tax is theleast-cost policy. Furthermore, the policyranking, based on total costs, changes as thereliability standard increases. Copyright Kluwer Academic Publishers 2004