Tradable Permits under Threat to Manage Nonpoint Source Pollution

Mourad Ali and Patrick Rio

Working Papers from LAMETA, Universtiy of Montpellier

Abstract: In this article we treat the problemof nonpoint source pollution as a problem of moral hazard in group. To solve this kind of problem we consider a group performance based tax coupled to tradable permits market. The tax is activated if the group fails to meet the ambient standard. So the role of the tax is to provide an incentive to ensure that the agents provide the abatement level necessary to achieve the standard. The role of the tradable permits market is to distribute effectively this abatement level through the price of the permits which rises with the exchange of the permits.

Pages: 11 pages
Date: 2009-12, Revised 2009-12
New Economics Papers: this item is included in nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:lam:wpaper:09-21

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