Management Areas and Fixed Costs in the Economics of Water Quality Trading

Tianli Zhao, Gregory Poe and Richard N. Boisvert

No 250017, Working Papers from Cornell University, Department of Applied Economics and Management

Abstract: Hung and Shaw’s (2005) trading-ratio system is modified to accommodate a management area approach wherein emissions sources are organized by impacts on identified “hot spots” and trading accounts for fixed as well as variable costs. An empirical example of phosphorus trading in a watershed with 22 potential traders demonstrates that marginal cost trading using a trading-ratio system yield nominal cost savings of less than 1% at the watershed level relative to the no-trade situation. A management area approach that accounts for fixed costs achieves over 13% in costs savings. The pattern of cost-effective trades is modeled using a mixed-integer approach.

Keywords: Resource/Energy; Economics; and; Policy (search for similar items in EconPapers)
Pages: 52
Date: 2015-05
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/250017/files/Cornell-Dyson-wp1508.pdf (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: https://EconPapers.repec.org/RePEc:ags:cudawp:250017

DOI: 10.22004/ag.econ.250017

Access Statistics for this paper

More papers in Working Papers from Cornell University, Department of Applied Economics and Management Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().