publication . Article . Preprint . 2009

Water Quality Trading When Nonpoint Pollution Loads are Stochastic

Gaurav S. Ghosh; James S. Shortle;
Open Access
  • Published: 01 Nov 2009 Journal: SSRN Electronic Journal (eissn: 1556-5068, Copyright policy)
  • Publisher: Elsevier BV
Abstract
We compare two tradable permit markets in their ability to meet a stated environmental target at least cost when some polluters have stochastic and non-measurable emissions. The environmental target is of the safety-first type, which requires probabilistic emissions control. One market is built around the trading ratio, which defines the substitution rate between stochastic and deterministic pollution, and is modeled on existing markets for water quality trading. The other market is built around a new definition of the pollution credit as a multi-attribute good, where the attributes supply information to the market on the environmental risks associated with stoc...
Subjects
free text keywords: Water Quality Trading; Stochastic Pollution; Market, Probabilistic logic, Pollution, media_common.quotation_subject, media_common, Water quality, Market risk, Business, Microeconomics, Environmental economics, Nonpoint source pollution, Price risk, Least cost
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