Spatial Dimensions of Environmental RegulationsCarpinteria marsh problemThe Carpinteria problemPowerPoint Presentation“Transfer coefficients”A concrete-lined channelPollution if no interaction effectsThe cost of emissions controlHow much abatement?Possible regulations to considerCurrent pollution level“Rollback”Effects of the rollbackMarketable permits / Emission feesTreat firms differentlyAdjusted equi-marginal principleSpatial Dimensions of Environmental RegulationsHow can economics help us better regulate when the damages occur over space?Carpinteria marsh problemMany creeks flow into Carpinteria salt marsh; pollution sources throughout.Pollution mostly in form of excess nutrients (e.g. Nitrogen & Phosphorous)How should pollution be controlled at each source to achieve an ambient standard?The Carpinteria problemMarsho1 Receptor (o)Many sources (x)xxxxxxxx“Transfer coefficients”If emissions increase in a greenhouse on Franklin Creek, how much does N concentration change in salt marsh?Index sources with i ; receptors with j.Pollution at receptor j is fn of emissions:pj = fj(e1, e2, …, eI)dfj/dei = aij = transfer coefficientNatural attenuation, concrete channels?A concrete-lined channelPollution if no interaction effectspj = aijei + BjWhere Bj is background level of Nitrogen.Now aij = dpij/deiThe cost of emissions controlCost is a function; depends on how much emission the source has to control:ci(Ei – ei), where Ei = uncontrolled emissions level.E.g. ci(Ei – ei) = i + i(Ei-ei) + i(Ei-ei)2 Then MC is linear.Control costs (by industry) often available from EPA, other sources.How much abatement?To achieve ambient standard, A, which sources should abate and how much?Mine ci(Ei-ei) s.t. aiei AIn words: minimize abatement cost such that total pollution at Carpinteria Salt Marsh A.Possible regulations to considerRollbackStandard engineering solution.Marketable permitsNot efficient because ai’s different.Constant fee to all pollutersSame effect as permitsSpatial version of Equi-marginal PrincipleCurrent pollution levelPaiEi > A“Rollback”Standard engineering solution.Everyone “rolls back” pollution by the same percentage:x = A/P0ei = EixE.g. A=1 ppm, P=1 ppm.Everyone rolls back by 1%If I started at 4, new level is 36.Effects of the rollbackStructured to exactly hit target (A).Ignores cost of abatement!Ignores different contribution of each source to receptor (Carpinteria Marsh)Can we do any better with an economic approach?Marketable permits / Emission feesPermits: Fix total amount of pollution that is allowed (A).Distribute A permits, where permit required for polluting, let firms trade.But this ignores the different contribution of each source to MarshSame for uniform Emission fees.Treat firms differentlySince each polluter has a different contribution to overall pollution, they need to be treated differently.If we’re only worried about N in ocean, then likely to be worse the closer you are to ocean!Need a mechanism that captures this effect…need an adjusted version of equi-marginal principle.Adjusted equi-marginal principleInstead of equating marginal costs of all polluters, need to adjust for different contributions to the receptor.Strong contribution, cheaper to abate per effective unit of pollution:MCk/ak = MCj/ajSet these = to marginal damage for
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