What is the Right Ambient Water Quality Tax?

Brett W. House, Gloria Helfand and Douglas M. Larson

No 271483, 1997 Annual meeting, July 27-30, Toronto, Canada from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This paper presents an extension and empirical application of Segerson's nonpoint pollution control mechanism. Segerson's incentive is designed to eliminate free riding by requiring each polluter to pay the full marginal cost of pollution for ambient water quality worse than a target, or to be subsidized for water quality better than that target. The magnitude of the incentive necessary to achieve a specified target depends on the assumed behavior of farmers: if they collude, a lower incentive level will achieve the same ambient water quality as a higher incentive if farmers act independently. Alternatively, an incentive level designed under the assumption that farmers will act independently will lead to greater abatement and subsidy payments to farmers if they collude. Thus, regulators need to consider how farmers will respond to each other when they calculate an incentive level. An empirical application is made to lettuce ·production in California's Salinas Valley.

Keywords: Political Economy; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 14
Date: 1997-07-27
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea97:271483

DOI: 10.22004/ag.econ.271483

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