Water Quality Trading with Lumpy Investments,Credit Stacking,and Ancillary Benefits

This paper studies the economics of a water quality trading market in a predominantly agricultural watershed, and explores the effects of credit stacking in such a market when buyers and sellers of pollution credits can only reduce pollution with large, discrete investments that yield discontinuous supply and demand. The research simulates hypothetical water quality trading markets in the corn‐belt area of Illinois, where wastewater treatment plants (WWTPs) can pay farmers to reduce nutrients by installing wetlands and farmers may or may not be allowed to earn payments for multiple services from one wetland. We find that wetlands are a more cost‐effective way to mitigate nitrogen pollution than abatement by WWTPs. Stacking credits may improve social welfare while providing more ecosystem services if there is enough demand for the primary credit in the market (nitrogen) to cover most of the cost of installing the wetland but the supply of nitrogen credits is not exhausted. However, in the presence of lumpy pollution reduction activities, the effects of allowing stacked credit sales are idiosyncratic and not necessarily positive; stacked payments may or may not satisfy additionality. The results imply that credit trading for nitrogen is likely to make society better off, but the effects of allowing farmers to receive multiple payments from a single wetland depend on details of the situation.     

The influence of metal source uncertainty on cost-effective allocation of mine water pollution abatement in catchments

In mine water pollution abatement, it is commonly assumed that known mine waste sites are the major pollution sources, thus neglecting the possibility of significant contribution from other old and diffuse sources within a catchment. We investigate the influence of different types of pollution source uncertainty on cost-effective allocation of abatement measures for mine water pollution. A catchment-scale cost-minimization model is developed and applied to the catchment of the river Dalälven, Sweden, in order to exemplify important effects of such source uncertainty. Results indicate that, if the pollution distribution between point and diffuse sources is partly unknown, downstream abatement measures, such as constructed wetlands, at given compliance boundaries are often cost-effective. If downstream abatement measures are not practically feasible, the pollution source distribution between point and diffuse mine water sources is critical for cost-effective solutions to abatement measure allocation in catchments. In contrast, cost-effective solutions are relatively insensitive to uncertainty in total pollutant discharge from mine water sources.     

Cost-Effective Control of Interdependent Water Pollutants

Excess nutrient loads to coastal waters lead to increased production of algae, which when decaying cause oxygen depletion in bottom sediments, which in turn leads to major changes in marine ecosystems. A cost-minimization model was investigated in which nitrogen and phosphorus were assumed to interact with respect to algae production. It was investigated under what conditions only a single nutrient should be decreased and when it is cost-effective to decrease both nutrients. The model was applied to the Baltic Proper, which is the largest of the seven major basins in the Baltic Sea. Results showed that the stringency of the environmental target, as well as assumptions regarding substitutability between nutrients, are important factors to determine the nutrient on which to focus. Uniform decrease rates for emissions are often used in international agreements, and the results of this model showed that the costs of making such proportional decreases could be substantial.     

Regional patterns of soil organic carbon stocks in China

Soil organic carbon (SOC) is of great importance in the global carbon cycle. Distribution patterns of SOC in various regions of China constitute a nation-wide baseline for studies on soil carbon changes. This paper presents an integrated and multi-level study on SOC stock patterns of China, and presents baseline SOC stock estimates by great administrative regions, river watersheds, soil type regions and ecosystem. The assignment is done by means of a recently completed 1: 1,000,000 scale soil database of China, which is the most detailed and reliable one in China at the present time. SOC densities of 7292 soil profiles collected across China in the middle of the 1980s were calculated and then linked to corresponding polygons in a digital soil map, resulting in a SOC Density Map of China on a 1: 1,000,000 scale, and a 1 km x 1 km grid map. Corresponding maps of administrative regions, river watersheds, soil types (ST), and ecosystems in China were also prepared with an identical resolution and coordinate control points, allowing GIS analyses. Results show that soils in China cover an area of 9.281 x 10(6)km(2) in total, with a total SOC stock of 89.14 Pg (1 Pg=10(15)g) and a mean SOC density of 96.0 t C/ha. Confidence limits of the SOC stock and density in China are estimated as [89.23 Pg, 89.08 Pg] and [96.143 t C/ha, 95.981 t C/ha] at 95% probability, respectively. The largest total SOC stock (23.60 Pg) is found in South-west China while the highest mean SOC density (181.9 t C/ha) is found in north-east China. The total SOC stock and the mean SOC density in the Yangtze river watershed are 21.05 Pg and 120.0 t C/ha, respectively, while the corresponding figures in the Yellow river watershed are 8.46 Pg and 104.3 t C/ha, respectively. The highest total SOC stocks are found in Inceptisols (34.39 Pg) with SOC density of 102.8 t C/ha. The lowest and highest mean SOC densities are found on Entisols (28.1 t C/ha), and on Histosols (994.728.1 t C/ha), respectively. Finally, the total SOC stock in shrub and forest ecosystem classes are 25.55 and 21.50 Pg, respectively; the highest mean SOC density (209.9 t C/ha) was recorded in the wetland ecosystem class and the lowest (29.0 t C/ha) in the desert ecosystem class. Among five forest ecosystem types, Evergreen conifer forest stores the highest SOC stock (6.81 Pg), and Deciduous conifer forest shows the highest SOC density (225.9 t C/ha). Figures of SOC stocks stratified by Administrative regions, river watersheds, soil types and ecosystem types presented in the study may constitute national-wide baseline for studies of SOC stock changes in various regions in the future.     

The scope for regulatory incentives to encourage increased efficiency of input use by farmers

Managing diffuse water pollution from agricultural land continues to be one of the more intractable challenges for environmental policy. The advent of the Water Framework Directive places the onus on EU member states to identify reasons why water bodies fail or are at risk of failure to meet good ecological status. In such cases, programmes of measures are to be enacted to mitigate the causes at least cost. Failing this, users may ultimately be faced with the full costs of pollution. This paper considers the scope for measures that address nitrogen and phosphorus pollution at source. Specifically the paper relates the diffuse pollution problem to the extent of over application of nitrogen and phosphorus. Data envelopment analysis applied to English cereal and dairy farmers, provides an indication of resource use and evidence of over application. This inefficiency provides a potential basis for either a least cost abatement approach using effective information and advice, or alternatively a pollution charge.     

不完全竞争行业中的环境工具有效性研究:一个理论框架

各级政府贯彻落实绿色发展的理念,实现经济增长与环境保护的共赢,才能真正实现"绿水青山就是金山银山"。在经济"新常态"背景下,防治环境污染是个复杂而系统性的工程,需要进行经济追因与综合治理,其中,制定实施有效的环境政策工具尤为关键。本文把微观经济学中的双寡头产量竞争模型作为基准模型拓展用于环境经济分析,并把环境税、环境规制、排污权交易这三类主要环境工具对企业生产决策的影响纳入基准模型,旨在对比研究不完全竞争行业中环境工具的有效性问题。结果表明:主要基于市场机制的环境经济政策比行政色彩浓厚的环境规制更有效率。提高环境税率或排污权价格均能显著削减行业污染物排放量,如果环境税率恰好等于排污权价格,则环境税与排污权交易这两类环境工具的效力相等。这对进一步建立和完善我国尚处于探索或初始实施阶段的环境工具,促进石化、电力、钢铁等不完全竞争行业的主要污染物减排,具有一定参考价值和借鉴意义。     

WATERSHED PLANNING FOR ACID MINE DRAINAGE ABATEMENT1

Acid drainage from abandoned mines is a widespread problem in old mining regions. Agencies seeking to abate it face the prospect of dealing with hundreds of potential abatement projects, stretching decades into the future. A systematic regional analysis is necessary to establish locations, objectives, priorities, and phasing of such projects. The U.S. Bureau of Mines developed a novel procedure for abatement planning in the 420 square mile Blacklick Creek Watershed in Pennsylvania. The plan sought to direct abatement projects toward pollution sources where degradation was worst and adverse effects greatest. It established abatement priorities by comparing the “supply” of sources to be reclaimed (the degrees of old mines' water quality degradation) with the “demand” for abatement to be done (the natural and cultural values represented by the region's demography, land use and other non-mining characteristics). Matrices were used to define the relationships among mining and non-mining factors; maps were developed to show the geographic distribution of the conclusions. The locations, priorities, and phasing of abatement objectives shown on the maps should provide guidance for any abatement effort, no matter what type of technology is applied to achieve the objectives. Over the many years in which abatement projects are to be performed in the Watershed, the plan can be used to define, coordinate, and establish priorities for the projects in a manner that can result in maximum abatement benefits from the application of limited funds.     

Mapping socio-economic scenarios of land cover change: a GIS method to enable ecosystem service modelling

We present a GIS method to interpret qualitatively expressed socio-economic scenarios in quantitative map-based terms. (i) We built scenarios using local stakeholders and experts to define how major land cover classes may change under different sets of drivers; (ii) we formalized these as spatially explicit rules, for example agriculture can only occur on certain soil types; (iii) we created a future land cover map which can then be used to model ecosystem services. We illustrate this for carbon storage in the Eastern Arc Mountains of Tanzania using two scenarios: the first based on sustainable development, the second based on 'business as usual' with continued forest-woodland degradation and poor protection of existing forest reserves. Between 2000 and 2025 4% of carbon stocks were lost under the first scenario compared to a loss of 41% of carbon stocks under the second scenario. Quantifying the impacts of differing future scenarios using the method we document here will be important if payments for ecosystem services are to be used to change policy in order to maintain critical ecosystem services.     

Improving National-Scale Carbon Stock Inventories Using Knowledge on Land Use History

National-scale inventories of soil organic carbon (SOC) and forest floor carbon (FFC) stocks have a high uncertainty. Inventories are often based on the interpolation of sampled information, often using a number of covariables to help such interpolation. The rationale for the choice of these covariables is not always documented, despite the fact that many local-scale studies have identified the factors explaining spatial variability of SOC and FFC stocks. These studies indicate, among others the importance of long-term land use history. Despite this, information on the effects of land use history has never been used to explain variability of carbon stocks in national-scale inventories. We designed an alternative method to improve national-scale inventories of SOC and FCC for the Dutch sand area that takes stock of the findings of detailed case studies. Determinants for SOC and FFC stocks derived from landscape-scale case studies were used to map national-scale spatial variability and to calculate national totals. The resulting national-scale spatial distribution was compared with the SOC stock map from the current Dutch greenhouse gas inventory. Using land use history to explain SOC variability decreased the error of the SOC stock estimate in 60 % of the area. The error in FFC stocks decreased in half of the forest area after including soil fertility, tree species, and forest age as explanatory factors. Estimates with reduced uncertainty will make land use and land management a more attractive and acceptable mitigation option to reduce emissions of greenhouse gases for the LULUCF sector.     

Modelling the effects of trade-offs between long and short-term objectives in fisheries management

Fisheries management is typically a complex problem, from both an environmental and political perspective. The main source of conflict occurs between the need for stock conservation and the need for fishing community well-being, which is typically measured by employment and income levels. For most fisheries, overexploitation of the stock requires a reduction in the level of fishing activity. While this may lead to long-term benefits (both conservation and economic), it also leads to a short-term reduction in employment and regional incomes. In regions which are heavily dependent on fisheries, short-term consequences of conservation efforts may be considerable. The relatively high degree of scientific uncertainty with respect to the status of the stocks and the relatively short lengths of political terms of office, generally give rise to the short-run view taking the highest priority when defining policy objectives. In this paper, a multi-objective model of the North Sea is developed that incorporates both long-term and short-term objectives. Optimal fleet sizes are estimated taking into consideration different preferences between the defined short-term and long-term objectives. The subsequent results from the model give the short-term and long-term equilibrium status of the fishery incorporating the effects of the short-term objectives. As would be expected, an optimal fleet from a short-term perspective is considerably larger than an optimal fleet from a long-run perspective. Conversely, stock sizes and sustainable yields are considerably lower in the long-term if a short-term perspective is used in setting management policies. The model results highlight what is essentially a principal-agent problem, with the objectives of the policy makers not necessarily reflecting the objectives of society as a whole.     

Forest environmental investments and implications for climate change mitigation

Forest environmental conditions are affected by climate change, but investments in forest environmental quality can be used as part of the climate change mitigation strategy. A key question involving the potential use of forests to store more carbon as part of climate change mitigation is the impact of forest investments on the timing and quantity of forest volumes that affect carbon storage. Using an economic optimization model, we project levels of U.S. forest volumes as indicators of carbon storage for a wide range of private forest investment scenarios. Results show that economic opportunities exist to further intensify timber management on some hectares and reduce the average timber rotation length such that the national volume of standing timber stocks could be reduced relative to projections reflecting historical trends. The national amount of timber volume is projected to increase over the next 50 yr, but then is projected to decline if private owners follow an economic optimization path, such as with more forest type conversions and shorter timber rotations. With perfect foresight, future forest investments can affect current timber harvest levels, with intertemporal linkages based on adjustments through markets. Forest investments that boost regenerated timber yields per hectare would act to enhance ecosystem services (e.g., forest carbon storage) if they are related to the rate of growth and extent of growing stock inventory.     

Environmental change and fishery management in the northern Persian Gulf

Approximately 52% of the 380,000 tons of fish landings in Iran come from the northern Persian Gulf, with a total of 108,000 fishermen and 8900 fishing vessels (2003 data). The fishery in the region is very important for the local economy, but the major problems facing the Iranian fisheries are an uncertain availability of fish and over-fishing. The Persian Gulf is a sensitive marine ecosystem. The Gulf is a partially enclosed sea with an average depth of 35 metres and replacement of waters take some three to five years. Environmental factors have a major effect on fish stocks and fisheries in such a sensitive ecosystem. This study examines the influence of environmental changes in water temperature, rainfall, wind and sea level pressure on fish stocks in the northern Persian Gulf and estimates the maximum sustainable yields for fisheries management. Multivariate data and surplus production bio-economic models with environmental parameters are used to determine optimal harvest and forecasting. The study found that rainfall, water temperature and wind had significant positive effects whereas sea level pressure had a negative effect on the fisheries in the northern Persian Gulf. It is concluded that environmental parameters should be monitored concurrently with the fisheries to allow a greater understanding for fisheries management in the Persian Gulf.     

A General Equilibrium Model of Ecosystem Services in a River Basin

This study builds a general equilibrium model of ecosystem services, with sectors of the economy competing for use of the environment. The model recognizes that production processes in the real world require a combination of natural and human inputs, and understanding the value of these inputs and their competing uses is necessary when considering policies of resource conservation. We demonstrate the model with a numerical example of the Mississippi‐Atchafalaya river basin, in which grain production in the upper basin causes hypoxia that causes damages to the downstream fishing industry. We show that the size of damages is dependent on both environmental and economic shocks. While the potential damages to fishing are large, most of the damage occurs from economic forces rather than a more intensive use of nitrogen fertilizers. We show that these damages are exacerbated by increases in rainfall, which will likely get worse with climate change. We discuss welfare effects from a tax on nitrogen fertilizers and investments in riparian buffers. A 3% nitrogen tax would reduce the size of the hypoxic zone by 11% at a cost of 2% of Iowa's corn output. In comparison, riparian buffers are likely to be less costly and more popular politically.     

Sustainable development in the Baltic sea region. Governance beyond the nation state

After the end of the Cold War, the Baltic Sea Region (BSR) developed into a highly dynamic area of cross-border cooperation and transnational networking. Three forms of governance beyond the nation state and appropriate case studies are presented here: (1) the Helsinki Convention as an international regime; (2) Baltic 21, the world's first regional Agenda 21, as an international policy network; (3) the Union of the Baltic Cities (UBC) as a transnational network. The achievement of sustainable development in the BSR undoubtedly requires a fruitful combination of national governance and these forms of international and transnational governance. In this respect, international policy networks, such as Baltic 21, and transnational networks, such as the UBC, promise to provide new approaches that can complement international and intergovernmental cooperation between nation states. Furthermore, it must also be taken into account that governance in the BSR will soon become embedded in European governance and lead to the Europeanisation of the Baltic Sea Area.     

Sustainable development in the Baltic sea region. Governance beyond the nation state

After the end of the Cold War, the Baltic Sea Region (BSR) developed into a highly dynamic area of cross-border cooperation and transnational networking. Three forms of governance beyond the nation state and appropriate case studies are presented here: (1) the Helsinki Convention as an international regime; (2) Baltic 21, the world's first regional Agenda 21, as an international policy network; (3) the Union of the Baltic Cities (UBC) as a transnational network. The achievement of sustainable development in the BSR undoubtedly requires a fruitful combination of national governance and these forms of international and transnational governance. In this respect, international policy networks, such as Baltic 21, and transnational networks, such as the UBC, promise to provide new approaches that can complement international and intergovernmental cooperation between nation states. Furthermore, it must also be taken into account that governance in the BSR will soon become embedded in European governance and lead to the Europeanisation of the Baltic Sea Area.     

The setting of standards for agricultural nitrogen emissions: a case study of the Delphi technique

The Delphi technique is a means of aggregating the judgement of a panel of experts in order to improve the quality of decision-making. This paper provides a case study of the technique by undertaking a three-round Delphi study to determine a package of best available techniques to reduce nitrogen emissions from a poultry unit under the Integrated Pollution Prevention and Control Directive (IPPC). Forms of nitrogen addressed included ammonia (NH3), nitrous oxide (N2O) nitrogen oxides (NOx), dusts and nitrate (NO3-), with the study providing a means to prioritise the pollution concerns on different spatial scales. The priority pollutant issues were the contribution of NH3 to eutrophication, the global cooling effect of NH4+ aerosol, the role of NH4+ as a vector for atmospheric transport of NOx and SO2, the contribution of N2O to global warming, and NO3- leaching. Reduced nitrogen (NHx) was rated as a priority on all scales, while N2O and NO3- were rated as priorities only on global and local scales, respectively. The study indicated the need for abatement techniques at each stage of poultry rearing and waste management, with particular attention to reduce NH3 emissions, reflecting the priority pollutant concerns. Measures identified by the panel include maintenance of dry litter, low emission removal of litter from housing and storage of litter under cover. Once the litter has left the farm, this should either be used as a biofuel for electricity generation or rapidly incorporated into agricultural soils. The amounts and timing of manure application should be tuned to crop needs. Uncertainties in the Delphi technique limit its suitability as a stand-alone decision making tool. However, the Delphi technique proved useful in identifying priority pollutant issues, areas of agreement, disagreement and where information is lacking. This demonstrates its use when dealing with the complex issues of prioritising pollution issues and abatement approaches.     

Uncertainty in exhaustible natural resource economics: The irreversible sunk costs of Hotelling

According to Pindyck (2007) there are three important aspects of uncertainly in environmental economics: (1) the benefits and costs of environmental policy tend to be highly non-linear, (2) environmental policy tends to involve important irreversibilities, where investment in pollution abatement can impose an irreversible, sunk cost on society, and where certain pollutants can stay in the environment forever and build up to cause even more future harm in which case investment in abatement can cause an irreversible, sunk benefit to society, and (3) environmental policy involves long time horizons and yet the discount rate society should use is uncertain for determining the net present value of costs and benefits of pollution abatement. These same uncertainties also affect non-renewable, exhaustible, natural resource economics and in particular the use of the Hotelling rule: (1) the costs, benefits and transversality conditions of using the Hotelling rule can be highly non-linear, (2) the Hotelling rule involves important sunk cost irreversibilities, which will be explained here, and (3) the Hotelling rule can involve long time horizons with uncertain discount rates. All three of these problem make it extremely difficult for a market to use in any way the Hotelling rule, yet by the sheer number of articles in non-renewable natural resource economics, one would believe that it is the basis of all resource markets. In this article, we concentrate on the sunk cost irreversibilities of using the Hotelling rule. The idea of the Hotelling rule is to optimally store a non-renewable resource, but the optimization is highly dependent on the actual reserves that are available to extract. However, reserves of underground exhaustible resources are often unobservable at the beginning stages of extraction which makes using the Hotelling Rule difficult.     

ESTABLISHING PRIORITIES IN MINE DRAINAGE REDUCTION A COST-EFFECTIVENESS APPROACH1

ABSTRACT Twenty-seven watersheds in the Susquehanna River Basin are severely degraded by acid mine drainage pollution. Approximately 620 miles of significant tributaries as well as 230 miles of principal rivers are either sterile or intermittently degraded by acid slugs. As a result of the acid discharges, many uses of the streams, such as water supply and recreation, are precluded. In the past, acid mine drainage abatement programs did not look beyond the immediate problem area. No considerations were given to the blending effect of natural alkalinity in other streams. Since the abatement of acid mine drainage pollution is extremely costly, a method of minimizing these costs was needed. The systematic, cost-effectiveness approach, discussed in this paper presents such a method. This system allows the water resources planners to control the allocation of funds for maximizing the abatement of acid mine drainage.     

Restoration of Marine Coastal Ecosystem Health as a New Goal for Integrated Catchment Management in Tolo Harbor, Hong Kong, China

This article demonstrates why it is necessary to have the restoration of marine coastal ecosystem health as a new goal for integrated catchment management in the coastal area of Tolo Harbor. The present goal of integrated catchment management (ICM) in the Tolo Harbor is based on water quality objectives. The performance of the ICM plan, the Tolo Harbor Action Plan (THAP), was evaluated using marine coastal ecosystem health indicators including both stress and response indicators. Since the implementation of THAP in 1988, some significant reductions in pollution loading have been observed: reduction of 83% of biological oxygen demand load and 82% of total nitrogen between 1988 and 1999. There has also been an improvement in the health of Tolo Harbor’s marine coastal ecosystem as evidenced by trends in physical, chemical, and biological indicators, although reverse fluctuations in some periods exist. However, such improvement can only be considered as the first sign of complete ecosystem health restoration, because ecosystem health covers not only physical, chemical, and biological aspects of an ecosystem, but also ecosystem service functions. The findings support the need to take the restoration and protection of marine coastal ecosystem health as a new goal rather than using water quality objectives. Steps necessary to further improve Tolo Harbor’s marine coastal ecosystem health are also discussed.     

Policy Utopias for Nutrient Credit Trading Programs with Nonpoint Sources

A promising program to address water contamination from nutrients is water quality trading (WQT), whereby entities with high abatement costs purchase credits from entities with lower abatement costs. The concept has found some success with point source water pollution, but very few trades have occurred in over 50 programs in the United States (U.S.) that have focused on nonpoint sources (NPSs). To understand why success has been slow, we identified three environments needed for programs to succeed: physical, economic, and institutional. We estimate that only 5% of watersheds in the U.S. currently listed as nutrient impaired provide a viable physical environment for trading nitrogen; 13% are suitable for phosphorus. Economic and institutional challenges would shrink that domain even further. Therefore, we find places with the ideal physical, economic, and institutional environments necessary for feasible WQT programs are virtual policy utopias — rare places with ideal environments. Fortunately, a growing literature provides the tools necessary to identify where these policy utopias are and to expand that domain through a better understanding about how to manage WQT programs more effectively.