Water-quality trading: Can we get the prices of pollution right?

Yoshifumi Konishi, Jay S. Coggins, Bin Wang

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Water-quality trading requires inducing permit prices that account properly for spatially explicit damage relationships. We compare recent work by Hung and Shaw (2005) and Farrow et al. (2005) for river systems exhibiting branching and nonlinear damages. The Hung-Shaw scheme is robust to nonlinear damages, but not to hot spots occurring at the confluence of two branches. The Farrow et al. (2005) scheme is robust to branching, but not to nonlinear damages. We also compare the two schemes to each other. Neither dominates from a welfare perspective, but the comparison appears to tilt in favor of the Farrow et al. scheme.

Original languageEnglish
Pages (from-to)3126-3144
Number of pages19
JournalWater Resources Research
Volume51
Issue number5
DOIs
Publication statusPublished - 2015 May 1
Externally publishedYes

Keywords

  • branching
  • nonlinear damages
  • spatially explicit prices
  • trading ratios
  • water-quality trading

ASJC Scopus subject areas

  • Water Science and Technology

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