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An Experimental Exploration of a Voluntary Mechanism to Reduce Nonpoint Source Water Pollution with a Background Threat of Regulation

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Listed:
  • Suter, Jordan F.
  • Vossler, Christian A.
  • Poe, Gregory L.
  • Schulze, William D.
  • Segerson, Kathleen

Abstract

In this paper we build on a voluntary mechanism introduced by Segerson and Wu (2006) that uses the threat of an ambient tax to induce nonpoint source polluters to reduce emissions. In addition to reviewing Segerson and Wu's policy, we propose a new voluntary/threat policy that offers some theoretical advantages over that put forward by Segerson and Wu. We then test various forms of voluntary/threat policies in the experimental economics laboratory and compare the outcomes to a policy that administers strictly a per unit ambient tax.

Suggested Citation

  • Suter, Jordan F. & Vossler, Christian A. & Poe, Gregory L. & Schulze, William D. & Segerson, Kathleen, 2006. "An Experimental Exploration of a Voluntary Mechanism to Reduce Nonpoint Source Water Pollution with a Background Threat of Regulation," 2006 Annual meeting, July 23-26, Long Beach, CA 21416, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21416
    DOI: 10.22004/ag.econ.21416
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    References listed on IDEAS

    as
    1. Spraggon, John, 2002. "Exogenous targeting instruments as a solution to group moral hazards," Journal of Public Economics, Elsevier, vol. 84(3), pages 427-456, June.
    2. Larry Karp, 2005. "Nonpoint Source Pollution Taxes and Excessive Tax Burden," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(2), pages 229-251, June.
    3. François Cochard & Marc Willinger & Anastasios Xepapadeas, 2005. "Efficiency of Nonpoint Source Pollution Instruments: An Experimental Study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(4), pages 393-422, April.
    4. Spraggon, John, 2004. "Testing ambient pollution instruments with heterogeneous agents," Journal of Environmental Economics and Management, Elsevier, vol. 48(2), pages 837-856, September.
    5. Christian A. Vossler & Gregory L. Poe & William D. Schulze & Kathleen Segerson, 2006. "Communication and Incentive Mechanisms Based on Group Performance: An Experimental Study of Nonpoint Pollution Control," Economic Inquiry, Western Economic Association International, vol. 44(4), pages 599-613, October.
    6. Marc O. Ribaudo, 2004. "Policy Explorations and Implications for Nonpoint Source Pollution Control: Discussion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1220-1221.
    7. Suter, Jordan F. & Poe, Gregory L. & Vossler, Christian A., 2005. "Beyond Optimal Linear Tax Mechanisms: An Experimental Examination of Damage-Based Ambient Taxes for Nonpoint Polluters," 2005 Annual meeting, July 24-27, Providence, RI 19411, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Lars Hansen, 1998. "A Damage Based Tax Mechanism for Regulation of Non-Point Emissions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(1), pages 99-112, July.
    9. Segerson, Kathleen & Wu, JunJie, 2006. "Nonpoint pollution control: Inducing first-best outcomes through the use of threats," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 165-184, March.
    10. Horan, Richard D. & Shortle, James S. & Abler, David G., 1998. "Ambient Taxes When Polluters Have Multiple Choices," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 186-199, September.
    11. Segerson, Kathleen, 1988. "Uncertainty and incentives for nonpoint pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 87-98, March.
    12. Segerson, Kathleen & Miceli, Thomas J., 1998. "Voluntary Environmental Agreements: Good or Bad News for Environmental Protection?," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 109-130, September.
    13. Cabe, Richard & Herriges, Joseph A., 1992. "The Regulation of Non-Point Sources of Pollution Under Imperfect and Asymmetric Information," Staff General Research Papers Archive 10787, Iowa State University, Department of Economics.
    14. Francisco Alpízar & Till Requate & Albert Schram, 2004. "Collective versus Random Fining: An Experimental Study on Controlling Ambient Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(2), pages 231-252, October.
    15. Cabe, Richard & Herriges, Joseph A., 1992. "The regulation of non-point-source pollution under imperfect and asymmetric information," Journal of Environmental Economics and Management, Elsevier, vol. 22(2), pages 134-146, March.
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