Pollution Discharge Permits Trading; an Effective Solution to the River Basins' Quality Management

Document Type : Applied Article

10.22067/jwsd.v7i2.85687

Abstract

Drawing upon five decades of experience in applying pollution control laws and programs, achieving water quality standards will never have been possible simply through the control of point sources. Designing discharge plans with the purpose of managing non-point sources along with point sources can be a solution to dealing with these conditions. As regards, recognizing the uncertainties in estimation of non-point sources pollution considered to be important. The market-based approach to transfer discharge permits between point and non-point sources and implementing it in the form of a proper market structure can be discussed as an efficient management tool in terms of considering inherent uncertainties of non-point sources as well as covering the shortcomings of the laws in this regard. These markets attractiveness would be increased due to the remarkable difference in marginal costs of pollution control of non-point sources with point. The inclination to participate in such a market can be increased by considering factors including the exchange type and optimized trade ratio. Besides, water quality trading market structures have a major role in the formation of exchanges between point and non-point sources. Possible structures to implement these markets include the stock market, bilateral negotiations and clearinghouses. Investigation into the main features of these structures in terms of market productivity and reliability of environmental efficiency indicates the inadequacy of the stock market structure between point and non-point sources. On the other hand, transaction costs and initial investments are key characteristics of the productivity of bilateral negotiations and clearinghouse market structures.

Keywords

• Pollution Discharge Permits
• Trade Ratio
• Bilateral Negotiation
• Clearinghouse

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