An Efficient Pollution Control Instrument: The Case of Urban Wastewater Pollution |
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Authors: | Jihad C Elnaboulsi |
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Institution: | 1.CRESE, Centre de Recherche sur les Stratégies Economiques,Université de Franche-Comté,Besan?on cedex,France |
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Abstract: | Urban wastewater and agriculture activities are the main sources of urban water pollution and of eutrophying nutrients in
many water ecosystems. Several EU directives have been adopted and affect the control of urban water pollution. The EU legislation
requires the achievement of good ecological and chemical status in all water. This paper focuses on the use of economic instruments
as a priority in the context of implementation. Our analysis only considers public wastewater utilities facing demand and
capacity shocks. The proposed mechanism constitutes efficient means of moving towards sustainability by promoting full-cost
pricing and considering external costs from wastewater services. Environmental damage associated with urban water pollution
are internalized. The model also explicitly considers the investment needed to set-up wastewater system facilities. Our results
indicate that savings in capacity could be achieved by adopting the proposed incentive-based mechanism that characterizes
the optimal capacity selection rule. |
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