EconPapers    
Economics at your fingertips  
 

(In)Efficient Management of Interacting Environmental Bads

Timo Kuosmanen () and Marita Laukkanen ()

No 54287, Discussion Papers from MTT Agrifood Research Finland

Abstract: 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
Date: 2009-10
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://purl.umn.edu/54287 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

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 ().

 
Page updated 2014-08-23
Handle: RePEc:ags:mttfdp:54287