| Sumario: | The writers present the results from an environmental-economic modeling project aimed at quantifying the potential cost savings from a Tradeable Pollution Permits (TPPs) scheme in Scotland's Forth Estuary. They suggest that a scheme such as this could be implemented to control inputs of biological oxygen demand more cheaply than the regulatory system currently in use. They combine a “MIKE 11” water-quality model with step-wise integer and linear programming models representing firms' abatement costs, and they compare cost savings under a deterministic scenario to savings under a stochastic scenario, where transfer coefficients—relating discharges to ambient water quality—are permitted to vary. They point out that potential cost savings seem to exist in both cases, although such savings are less in the stochastic case. They consider potential barriers to any real-life TPP market actually achieving these potential cost savings.
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