Watershed Nutrient Trading Under Asymmetric Information

This study evaluates first- and second-best trading policies for regulating watershed phosphorus under asymmetric information. The trading policies are differentiated on the degree to which regulators observe point and nonpoint source abatement efforts. The efficiency losses attributable to these informational asymmetries and those of the second-best policies can be measured in social welfare, and provide regulators the shadow value of foregoing first-best measures. Given representative monitoring costs from national water monitoring programs, it is shown that under asymmetric information, the chosen second-best trading policies outperform first-best policies by 11% in the control of watershed nutrient pollution.


Issue Date:
2002-10
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/31382
Published in:
Agricultural and Resource Economics Review, Volume 31
Number 2
Page range:
221-233
Total Pages:
13




 Record created 2017-04-01, last modified 2017-08-22

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