(In)Efficient Management of Interacting Environmental Bads
Timo Kuosmanen () and
Marita Laukkanen ()
No 54287, Discussion Papers from MTT Agrifood Research Finland
Many environmental problems involve the transformation of multiple harmful substances into one or more damage agents much in the same way as a firm transforms inputs into outputs. Yet environmental management differs from a firm’s production in one important respect: while a firm seeks efficient input allocation to maximize profit, an environmental planner allocates abatement efforts to render the production of damage agents as inefficient as possible. We characterize a solution to the hmultiple pollutants problem and show that the optimal policy is often a corner solution, in which abatement is focused on a single pollutant. Corner solutions may arise even in well-behaved problems with concave production functions and convex damage and cost functions. Furthermore, even concentrating on a wrong pollutant may yield greater net benefits than setting uniform abatement targets for all harmful substances. Our general theoretical results on the management of flow and stock pollutants are complemented by two numerical examples illustrating the abatement of eutrophying nutrients and greenhouse gases.
Keywords: climate change; cost-benefit analysis; eutrophication; multiple pollutants; optimal environmental policy; pollution control; Environmental Economics and Policy (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:ags:mttfdp:54287
Access Statistics for this paper
More papers in Discussion Papers from MTT Agrifood Research Finland Contact information at EDIRC.
Series data maintained by AgEcon Search ().