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Second‐Best Tax Policies to Reduce Nonpoint Source Pollution
Author(s) -
Larson Douglas M.,
Helfand Gloria E.,
House Brett W.
Publication year - 1996
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243867
Subject(s) - nonpoint source pollution , clean water act , pollution , production (economics) , environmental science , natural resource economics , welfare , environmental economics , business , water quality , economics , microeconomics , ecology , biology , market economy
Control of nonpoint source pollution often requires regulation of inputs, but first‐best solutions are unattainable. Because inputs are monitored by different agencies and regulatory coordination can be costly, it may be more practical to regulate single inputs. A cost‐effectiveness approach to determining the best single‐input tax policy is developed and applied to the question of reducing nitrate leaching from lettuce production in California. Water is the best single input to regulate, and efficiency losses from this second‐best approach appear not to be great. Conditions for the welfare ranking of policies to be invariant to heterogeneity in production or leaching are identified.