Empirical evaluation of nonpoint pollution policies under agent heterogeneity: regulating intensive dairy production in the Waikato region of New Zealand

Graeme Doole and David Pannell

Australian Journal of Agricultural and Resource Economics, 2012, vol. 56, issue 01, 20

Abstract: Models used for policy evaluation rarely consider firm heterogeneity, despite its importance for instrument design. This study considers agent heterogeneity explicitly in the evaluation of policies for nonpoint pollution control through the integration of decomposition and calibration procedures for programming models. The application concerns the regulation of nitrate leaching from intensive dairy production in the Waikato region of New Zealand. Failing to represent firm heterogeneity leads to widely different estimates of mitigation costs, relative to where heterogeneity is considered. Variation in baseline emissions and the slopes of abatement cost curves between firms renders a differentiated policy less costly than a uniform standard. However, the relative values of these policies are not broadly different, as firms required to do the most abatement – intensive farms with large baseline pollutant loads – can do so more cheaply, on average.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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Journal Article: Empirical evaluation of nonpoint pollution policies under agent heterogeneity: regulating intensive dairy production in the Waikato region of New Zealand (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aareaj:204172

DOI: 10.22004/ag.econ.204172

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