Multiple interactive pollutants in water quality trading (original) (raw)

Optimization of Pollutant Discharge Permits, Using the Trading Ratio System: A Case Study

Earth

Water quality management of rivers is one of the challenges in the analysis of water resource systems. The optimal operation of the pollutant carrying capacity of these systems provides significant economic value and could reduce treatment costs. In this study, the application of the trading ratio system is investigated to control the cost of pollutants in a river and make a fair deal. In this regard, transfer coefficients between pollution sources, along with the trade coefficients, are determined, considering the system limitations and each pollutant’s contaminant impact. To provide allowable limits of river water quality concentrations, the total cost of all sources and the system is minimized, using the linear programming method. Finally, the new trading discharge permits are calculated for each source. The proposed method is successfully applied to Dez River as a case study. Results show that using a trading ratio system could maintain water quality at a standard level containi...

A trading-ratio system for trading water pollution discharge permits

Journal of Environmental Economics and Management, 2005

The fact that water flows to the lowest level uni-directionally is a very specific and useful property of water. By utilizing this property, we design a trading-ratio system (TRS) of tradable discharge permits for water pollution control. Such a trading-ratio system has three main characteristics: (1) each zone's effluent cap is set by taking into account the water pollution loads transferred from the upstream zones; (2) the trading ratios are set equal to the reciprocals of the exogenous transfer coefficients among zones; and (3) permits are freely tradable among dischargers according to the trading ratios. This paper shows that the TRS could take care of the location effect of a discharge and could achieve the predetermined standards of environmental quality at minimum aggregate abatement costs. Problems with hot spots and free riding could be avoided, and the burdens on both dischargers and the environmental authority would be comparatively more modest.

Weighted Sum Transferable Discharge Permit Programs for Control of Multiple Pollutants

Water Resources Research, 1991

Transferable discharge permit (TDP) programs for controlling several pollutants may manage such pollutants as several individual commodities or as a single weighted sum of the various pollutants. This paper shows that the weighted sum permit program may be appropriate for managing pollutants that have an additive or a noninteractive effect on environmental quality. However, under this approach, administrators do not have direct control over the amount of each pollutant that is discharged, and environmental quality may be jeopardized unless the selected weighting factors induce a market equilibrium that satisfies environmental quality standards for the region. Estimates of the costeffective weighting factors that would tend to satisfy environmental quality standards under such programs are developed here. These estimates require complete water quality information and, in the case of noninteractive pollutants, treatment costs. An approach is described for estimating the cost-effective weighting factors for noninteractive pollutants in cases where treatment cost information is unknown. This approach is demonstrated for a weighted sum TDP program for biochemical oxygen demand (BOD) and phosphorus. The results of this demonstration suggest that for weighted sum permits for these pollutants it is possible to determine a set of weighting factors that achieve adequate environmental protection, cost efficiency, and certainty of system outcome. the Dillon Reservoir watershed in Colorado and allows for trading between point and nonpoint sources [Elmore et al., , 1984]. Another controls biochemical oxygen demand (BOD) discharges in water quality-limited segments on the Fox River in Wisconsin [David and Joeres, 1983]. As interest in such programs increases, however, the need for approaches that handle the more general case, the one in which several pollutants are managed, is likely to increase. Two types of TDP programs for managing multiple pollutants have been suggested: (1) programs that manage pollutants individually, where each permit is based on the quantity of one pollutant or on its environmental effect (see, e.g.,

A Mathematical Programming Approach to Pollution Trading

Industrial & Engineering Chemistry Research, 2011

Pollutant trading adds flexibility to the pollution abatement decision making and introduces a new alternative to policy makers and industries. The overall goal is to meet environmental conditions equal or better than those obtained through the implementation of pollutant treatment technologies, but at a lower cost. This work proposes optimization models that can guide industries in taking optimal decisions under the flexibility provided by the trading. The mathematical models, formulated as mixedinteger programming problems, are limited to watershed trading and have been implemented and solved through the GAMS modeling environment. Results include optimal decisions for each pollutant source in order to satisfy global environmental regulations. That is, either implementing one of the available pollution abatement technologies or attaining credits through trading. To assess the performance of the optimization models, we consider a mercury trading case study. A comparison among the nontrading solution and the solutions of the various pollution trading models is presented and analyzed. As the environmental constraints become more stringent, the value of the objective function (cost of technology implementation and fines) increases and the configuration of the required technologies changes to avoid high concentrations of pollutants presented in the various discharge points of the watershed. 2. AN MILP FORMULATION FOR POLLUTION TRADING OPTIMIZATION IN A WATERSHED Our basic formulation is based on the work of Shastri et al., 24 and it considers a set of pollutant sources with a specific pollutant discharge to a watershed.

The Structure and Practice of Water Quality Trading Markets

Journal of the American Water Resources Association, 2002

The use of transferable discharge permits in water pollution, what we will call water quality trading (WQT), is rapidly growing in the U.S. This paper reviews the current status of WQT nationally and discusses the structures of the markets that have been formed. Four main structures are observed in such markets: exchanges, bilateral negotiations, clearinghouses, and sole source offsets. The goals of a WQT program are environmental quality and cost effectiveness. In designing a WQT market, policy makers are constrained by legal restrictions and the physical characteristics of the pollution problem. The choices that must be made include how trading will be authorized, monitored and enforced. How these questions are answered will help determine both the extent to which these goals are achieved, and the market structures that can arise. After discussing the characteristics of different market structures, we evaluate how this framework applies in the case of California's Grassland Drainage Area Tradable Loads Program. (KEY TERMS: transferable discharge permits; nonpoint source pollution; water policy/regulation/decision making; water quality.)

Trading Efficiency in Water Quality Trading Markets: An Assessment of Trade-Offs

SSRN Electronic Journal, 2011

Declining water quality as a result of increased nutrient leaching is a serious and growing concern, both internationally and in New Zealand. Water pollution issues have traditionally been addressed with command-and-control type regulation, but market-based nutrient trading schemes are becoming more widespread. In New Zealand, a cap-and-trade system has been implemented in Lake Taupo and another has been designed for Lake Rotorua. Despite the importance placed on avoiding transaction costs in water quality trading markets, there has been little discussion in the literature of practical policies to decrease these transaction costs, or any real assessment of when it is and is not optimal to decrease transaction costs. This paper begins to address these issues. We find that strong efforts to control time-of-trade transaction costs are most likely to be worthwhile in schemes with heterogeneous participants and large expected values and volumes of trading. The trading inefficiency that results from search and bargaining, and trade registration costs can be minimised at some cost. Regulators can reduce trade approval costs if they establish baseline leaching levels for all participants and design standardised leaching monitoring systems as part of the setup of the system, and monitor all sources equally regardless of whether participants trade instead of estimating and approving changes in traders' leaching at the time of each trade (as occurs in a baseline-and-credit system). Finally we find that while regulators may be tempted to restrict trading or increase measuring and monitoring requirements to increase the environmental certainty of a scheme's outcome, environmental risk may be better addressed through a less certain but more stringent environmental target.