IDEAS home Printed from https://ideas.repec.org/p/ete/etewps/ete0126.html
   My bibliography  Save this paper

Effluent trading to improve water quality: what do we know today?

Author

Listed:
  • Sandra Rousseau

    () (K.U.Leuven, C.E.S., Energy, Transport and Environment)

Abstract

When discussing tradable permit systems relating to water, three fundamentally different fields of application can be identified (Kraemer and Banholzer, 1999). Firstly tradable permits for water, or tradable water abstraction rights, can be used for quantitative water resource management. Secondly tradable discharge rights, or tradable water pollution rights, can be use to protect and manage (surface) water quality. Thirdly there are tradable permits to use or consume water- borne resources, such as fish or the potential energy of water at height. In this overview we concentrate on the second case; i.e. the use of tradable water pollution rights. Watershed based trading or effluent trading, allows a pollution source to buy controls or permits that will reduce the amount of a problem pollutant elsewhere in the watershed or drainage basin. By buying such controls, the factory does not need to install abatement technologies to lower the discharge of that pollutant for its own plant. Parties involved in the trade want to either: (a) trade directly with each other; or (b) create a market of 'credits' that represent a specific amount of pollutant reduction, as is currently done with trading air emission reductions. The intent of trading is to achieve an expected reduction of a particular pollutant at a lower cost. The challenge with trading is to allow for innovative, market-based reforms without compromising the existing safeguards in environmental protection (National Wildlife Federation, 1999). It is important to distinguish between two types of pollution sources: point and nonpoint sources. Point sources discharge from a defined route, such as a pipe. Nonpoint source, on the contrary, have diffuse discharges that enter a river or lake as runoff from a wide geographic area. Examples of this last category include runoff from agricultural fields, roads and parking lots.

Suggested Citation

  • Sandra Rousseau, 2001. "Effluent trading to improve water quality: what do we know today?," Energy, Transport and Environment Working Papers Series ete0126, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
  • Handle: RePEc:ete:etewps:ete0126
    as

    Download full text from publisher

    File URL: https://lirias.kuleuven.be/bitstream/123456789/119753/1/ETE-WP01-26.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Laffont, Jean-Jacques & Tirole, Jean, 1996. "Pollution permits and compliance strategies," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 85-125, October.
    2. Jaffe Adam B. & Stavins Robert N., 1995. "Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 43-63, November.
    3. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
    4. Charles D. Kolstad, 2000. "Spatial Environmental and Resource Economics," Books, Edward Elgar Publishing, number 1918.
    5. Goulder, Lawrence H. & Parry, Ian W. H. & Williams III, Roberton C. & Burtraw, Dallas, 1999. "The cost-effectiveness of alternative instruments for environmental protection in a second-best setting," Journal of Public Economics, Elsevier, vol. 72(3), pages 329-360, June.
    6. Rob van der Veeren & Richard Tol, 2001. "Benefits of a Reallocation of Nitrate Emission Reductions in the Rhine River Basin," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 18(1), pages 19-41, January.
    7. Kling, Catherine & Rubin, Jonathan, 1997. "Bankable permits for the control of environmental pollution," Journal of Public Economics, Elsevier, vol. 64(1), pages 101-115, April.
    8. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, Enero.
    9. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435, Elsevier.
    10. Weber, Marian L., 2001. "Markets for Water Rights under Environmental Constraints," Journal of Environmental Economics and Management, Elsevier, vol. 42(1), pages 53-64, July.
    11. Hilary Sigman, 2002. "International Spillovers and Water Quality in Rivers: Do Countries Free Ride?," American Economic Review, American Economic Association, vol. 92(4), pages 1152-1159, September.
    12. Laffont, Jean-Jacques & Tirole, Jean, 1996. "Pollution permits and environmental innovation," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 127-140, October.
    13. Atkinson, Scott & Tietenberg, Tom, 1991. "Market failure in incentive-based regulation: The case of emissions trading," Journal of Environmental Economics and Management, Elsevier, vol. 21(1), pages 17-31, July.
    14. Malik, Arun S., 1990. "Markets for pollution control when firms are noncompliant," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages 97-106, March.
    15. Keeler, Andrew G., 1991. "Noncompliant firms in transferable discharge permit markets: Some extensions," Journal of Environmental Economics and Management, Elsevier, vol. 21(2), pages 180-189, September.
    16. Milliman, Scott R. & Prince, Raymond, 1989. "Firm incentives to promote technological change in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 247-265, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nadine Wittmann, 2014. "A Microeconomic Perspective on Water Resources Management: Analyzing the Effects on Optimal Land Rents Along a River Basin," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(5), pages 1309-1325, March.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ete:etewps:ete0126. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (library EBIB). General contact details of provider: http://edirc.repec.org/data/etkulbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.