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Potential cost savings from discharge allowance trading: A case study and implications for water quality trading
Author(s) -
Sado Yukako,
Boisvert Richard N.,
Poe Gregory L.
Publication year - 2010
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1029/2009wr007787
Subject(s) - allowance (engineering) , watershed , environmental science , emissions trading , water quality , homogeneous , baseline (sea) , total maximum daily load , business , environmental economics , natural resource economics , water resource management , environmental engineering , economics , operations management , computer science , ecology , mathematics , fishery , climate change , machine learning , biology , combinatorics
Applying a trading ratio system similar to that proposed by Hung and Shaw (2005), we estimate the potential cost savings of a phosphorus emissions trading program that meets overall total maximum daily load allocations among 22 wastewater treatment plants (WWTPs) in the Passaic River watershed (United States) to be a modest 2–3% relative to a no‐trade baseline. These results may be typical of those in relatively small watersheds such as the Passaic, where there are limited numbers of potential traders and relatively homogeneous abatement technologies across WWTPs. More substantial gains from trade may accrue to a concentrated group of WWTPs, suggesting that watershed managers should focus on a targeted set of traders within a watershed. Under certain conditions, additional gains may be achieved by aggregating WWTPs into zones within which there can be one‐to‐one allowance trading.