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Prevention Versus Treatment Under Precautionary Regulation: A Case Study Of Groundwater Contamination Under Uncertainty

  • Lichtenberg, Erik
  • Penn, Tony M.

Policy discussions of agricultural pollution problems characterize prevention as more cost effective and precautionary than ex post treatment. We derive conditions under which treatment alone is more cost effective in situations involving multiple sources of emissions, multiple sites affected, and a commonly used precautionary approach to uncertainty. We also show that a greater degree of precaution can result in less reliance on prevention. An empirical case study indicates that treatment alone is the most cost effective means of dealing with nitrate in most Maryland community water system wells. The use of leaching prevention measures is restricted to the most intensive poultry producing areas. The incremental cost of precaution is substantial.

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Paper provided by University of Maryland, Department of Agricultural and Resource Economics in its series Working Papers with number 28584.

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Date of creation: 2001
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Handle: RePEc:ags:umdrwp:28584
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  1. Lichtenberg, Erik & Zilberman, David & Bogen, Kenneth T., 1989. "Regulating environmental health risks under uncertainty: Groundwater contamination in California," Journal of Environmental Economics and Management, Elsevier, vol. 17(1), pages 22-34, July.
  2. Olson, Mancur & Zeckhauser, Richard, 1970. "The Efficient Production of External Economies," American Economic Review, American Economic Association, vol. 60(3), pages 512-17, June.
  3. Lichtenberg, Erik & Zilberman, David, 1988. "Efficient Regulation of Environmental Health Risks," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 167-78, February.
  4. Beavis, Brian & Walker, Martin, 1983. "Achieving environmental standards with stochastic discharges," Journal of Environmental Economics and Management, Elsevier, vol. 10(2), pages 103-111, June.
  5. A. Mitchell Polinsky & Steven Shavell, 1992. "Optimal Cleanup and Liability After Environmentally Harmful Discharges," NBER Working Papers 4176, National Bureau of Economic Research, Inc.
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