2002 World Congress of Environmental and Resource Economists

The implications of the propagation of uncertainty for the efficiency of stochastic water pollution control were analyzed. The empirical analysis focused on nitrogen pollution of the Baltic Sea from Swedish crop farms. A two moment model (mean and variance) of the distribution of coastal load was developed and integrated with an economic model of arable land-use choice. It was shown that uncertainty propagates through the system if arable emissions and retention are negatively correlated, and riverine loads (emissions less retention) positively correlated. Under these conditions a precision requirement increases the efficiency of abatement in catchments with relatively high load variability ceteris paribus. Relative abatement increased significantly with the precision requirement in high retention regions because these regions had a relatively large impact on the variability of coastal load. Thus if the Baltic damage function is convex then increasing abatement in high retention regions should increase overall economic efficiency.



	Paper Title:	Stochastic Arable-Nitrogen Abatement From Heterogeneous Sources: Cost-Effective Coastal Load Reduction
	Presenting Author:	Mark Brady (Swedish University of Agricultural Sciences)
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	Abstract:	The implications of the propagation of uncertainty for the efficiency of stochastic water pollution control were analyzed. The empirical analysis focused on nitrogen pollution of the Baltic Sea from Swedish crop farms. A two moment model (mean and variance) of the distribution of coastal load was developed and integrated with an economic model of arable land-use choice. It was shown that uncertainty propagates through the system if arable emissions and retention are negatively correlated, and riverine loads (emissions less retention) positively correlated. Under these conditions a precision requirement increases the efficiency of abatement in catchments with relatively high load variability ceteris paribus. Relative abatement increased significantly with the precision requirement in high retention regions because these regions had a relatively large impact on the variability of coastal load. Thus if the Baltic damage function is convex then increasing abatement in high retention regions should increase overall economic efficiency.
	Link to paper:	http://weber.ucsd.edu/~carsonvs/papers/659.pdf

	Session / Day / Time	6D / Tuesday / 10:15 - 11:45 am

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