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Internalization in a stochastic pollution model
Author(s) -
Hochman Eithan,
Zilberman David,
Just Richard
Publication year - 1977
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/wr013i006p00877
Subject(s) - pollution , bay , surface runoff , externality , environmental science , stochastic modelling , natural resource economics , water resource management , economics , mathematics , microeconomics , engineering , civil engineering , statistics , ecology , biology
This paper develops and applies a stochastic model for internalizing pollution externalities. Pollution occurs or does not, depending on factors related to a stochastic environment and human error. But the probability of pollution can be altered by adopting various technologies. The model is applied to the problem of effluent runoff from dairies near the San Francisco Bay, which can prevent shellfish harvest in the bay. With runoff holding areas, pollution occurs if a rainstorm is severe enough to cause overflow. Standards rather than taxes are used as policy instruments in the model. Results generally indicate that an accurate approximation of stochastic distribution is a necessity. Specific implications for the dairy problem are that present regulations are too lenient.