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Experiments on Damage-Based Ambient Taxes for Nonpoint Source Polluters

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  • Jordan F. Suter
  • Christian A. Vossler
  • Gregory L. Poe
  • Kathleen Segerson

Abstract

This article presents experimental tests of a linear and a nonlinear ambient tax mechanism that involve modest information requirements for the regulator. When agents are not allowed to communicate, both tax mechanisms result in emission levels that approximate the social optimum. When agents can communicate, emissions are considerably below the optimum, but we show that the tax function can be scaled to achieve social efficiency. Finally, by disaggregating the overall efficiency measure, we show that changing the pollution threshold that triggers the tax increases the inefficiency resulting from variation in agent-level decisions, but does not affect average emissions. Copyright 2008, Oxford University Press.

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  • 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.
  • Handle: RePEc:oup:ajagec:v:90:y:2008:i:1:p:86-102
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.01055.x
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    Cited by:

    1. 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.
    2. 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.
    3. Kai-Uwe Kuhn & Neslihan Uler, 2019. "Behavioral sources of the demand for carbon offsets: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 22(3), pages 676-704, September.
    4. Marsh, Dan & Tucker, Steve & Doole, Graeme, 2014. "An experimental approach to assessment of trading and allocation mechanisms for nutrient trading," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 167195, Australian Agricultural and Resource Economics Society.
    5. Mikołaj Czajkowski & Hans E. Andersen & Gite Blicher-Mathiasen & Wiktor Budziński & Katarina Elofsson & Jan Hagemejer & Berit Hasler & Christoph Humborg & James C. R. Smart & Erik Smedberg & Per Ståln, 2020. "Increasing the cost-effectiveness of water quality improvements through pollution abatement target-setting at different spatial scales," Working Papers 2020-02, Faculty of Economic Sciences, University of Warsaw.
    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. Leah H. Palm-Forster & Paul J. Ferraro & Nicholas Janusch & Christian A. Vossler & Kent D. Messer, 2019. "Behavioral and Experimental Agri-Environmental Research: Methodological Challenges, Literature Gaps, and Recommendations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 719-742, July.
    8. 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).
    9. Vossler, Christian A. & Suter, Jordan F. & Poe, Gregory L., 2013. "Experimental evidence on dynamic pollution tax policies," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 101-115.
    10. Graeme J. Doole, 2010. "Evaluating Input Standards for Non‐Point Pollution Control under Firm Heterogeneity," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(3), pages 680-696, September.
    11. Hansen, Lars Gårn, 2020. "A Montero payment mechanism for regulating non-point pollution emissions," Resource and Energy Economics, Elsevier, vol. 61(C).
    12. 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.
    13. 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.
    14. 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.
    15. Elizabeth A. Wilman, 2013. "Instruments for Forest Habitat Connectivity," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 6(1), January.
    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.
    17. Anastasios Xepapadeas, 2011. "The Economics of Non-Point-Source Pollution," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 355-373, October.
    18. François Cochard & Anne Rozan, 2010. "Taxe ambiante : un outil adapté à la lutte contre les coulées de boue ? Une étude expérimentale," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 91(3), pages 296-326.
    19. 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.
    20. Banerjee, Simanti & Cason, Timothy N. & de Vries, Frans P. & Hanley, Nick, 2017. "Transaction costs, communication and spatial coordination in Payment for Ecosystem Services Schemes," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 68-89.
    21. Matthew Kotchen & Kathleen Segerson, 2020. "The Use of Group-Level Approaches to Environmental and Natural Resource Policy," NBER Working Papers 27142, National Bureau of Economic Research, Inc.
    22. 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.
    23. Camacho-Cuena, Eva & Requate, Till, 2012. "The regulation of non-point source pollution and risk preferences: An experimental approach," Ecological Economics, Elsevier, vol. 73(C), pages 179-187.
    24. Cason, Timothy N. & Gangadharan, Lata, 2013. "Empowering neighbors versus imposing regulations: An experimental analysis of pollution reduction schemes," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 469-484.
    25. 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.

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