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Emission versus Input Taxes for Diffuse Nitrate Pollution Control in the Presence of Transaction Costs

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  • Athanasios Kampas
  • Ben White

Abstract

The most important obstacle to solving diffuse pollution problems is that emissions are either unobservable or cannot be observed at a reasonable cost. Biophysical models may provide sufficient information to set a cost-effective emission tax. However, evidence from recent studies has shown that transaction costs for emission-based policies are higher per hectare than for input-based policies. An economic model of agriculture for the Kennet catchment in south-east England shows that, when transaction costs are accounted for, an input tax is more efficient than an emission tax over a range of emission standards. This result has policy implications in that it indicates, first, that economists' policy recommendations should account for transaction costs, and, secondly, that the standard advice that emission-based policies are superior may be wrong where transaction costs differ substantially between emission- and input-based policies.

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  • Athanasios Kampas & Ben White, 2002. "Emission versus Input Taxes for Diffuse Nitrate Pollution Control in the Presence of Transaction Costs," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 45(1), pages 129-139.
    • Handle: RePEc:taf:jenpmg:v:45:y:2002:i:1:p:129-139
    DOI: 10.1080/09640560120100222
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    References listed on IDEAS

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    1. Krupnick, Alan J. & McConnell, Virginia D. & Austin, David H. & Cannon, Matthew & Stoessell, Terrell & Morton, Brian, 1998. "The Chesapeake Bay and the Control of NOx Emissions: A Policy Analysis," Discussion Papers 10576, Resources for the Future.
    2. Ribaudo, Marc & Horan, Richard D. & Smith, Mark E., 1999. "Economics of Water Quality Protection from Nonpoint Sources: Theory and Practice," Agricultural Economic Reports 33913, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Scott Steele, 2010. "An Organisational Discussion of Incomplete Contracting and Transaction Costs in Conservation Contracts," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(1), pages 163-174, February.
    2. Leon-Santana, Miguel & Hernandez, Juan M., 2008. "Optimum management and environmental protection in the aquaculture industry," Ecological Economics, Elsevier, vol. 64(4), pages 849-857, February.
    3. Innocent Bakam & Robin Matthews, 2009. "Emission trading in agriculture: a study of design options using an agent-based approach," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 14(8), pages 755-776, December.
    4. Philippe Le Goffe, 2005. "Le projet de loi sur I'eau : une réflexion économique," Working Papers hal-02306148, HAL.
    5. Graham, Tennille & White, Benedict & Pannell, David J., 2003. "Efficiency Policies for Salinity Management: Preliminary Research from a Spatial and Dynamic Metamodel," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57879, Australian Agricultural and Resource Economics Society.

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