A simulation of factors impeding water quality trading

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dc.contributor.author Smith, Craig M.
dc.contributor.author Peterson, Jeffrey M.
dc.contributor.author Leatherman, John C.
dc.contributor.author Williams, Jeffery R.
dc.date.accessioned 2013-03-21T13:59:24Z
dc.date.available 2013-03-21T13:59:24Z
dc.date.issued 2013-03-21
dc.identifier.uri http://hdl.handle.net/2097/15392
dc.description.abstract While there is substantial evidence that nonpoint sources have lower nutrient reduction costs than point sources, experience with water quality trading (WQT) reveals a common theme: little or no trading activity. The success of WQT seems, in part, to depend on the structure of the market created to bring buyers and sellers together to transact exchanges. To examine the ways that various market imperfections may affect the performance of a WQT market, a model is constructed which simulates a hypothetical point-nonpoint market. This paper focuses on answering the following question: How can WQT programs be designed in ways that take into account factors that result in non-optimal contracting and what are the implications (if there are any) for determining trading ratios? Here, we find that apart from any implications for environmental risk or political-economic factors, there is an economic welfare justification for high trading ratios in certain situations with limited trading information and/or other barriers to trade. Limited information and other barriers to trade which inhibit the optimal contracting of trades introduces a random element to market participation, creating a risk that high-cost sellers (low-value buyers) will transact to displace low-cost sellers (high-value buyers) who could have traded for greater gain. en_US
dc.language.iso en_US en_US
dc.relation.uri http://www.jrap-journal.org/pastvolumes/2010/v42/v42_n2_a6_smith_peterson.pdf en_US
dc.rights Permission to archive granted by the Journal of Regional Analysis and Policy and the Mid-Continent Regional Science Association, February 27, 2013. en_US
dc.subject Water quality trading en_US
dc.title A simulation of factors impeding water quality trading en_US
dc.type Article (publisher version) en_US
dc.date.published 2012 en_US
dc.citation.epage 176 en_US
dc.citation.issue 2 en_US
dc.citation.jtitle Journal of Regional Analysis & Policy en_US
dc.citation.spage 162 en_US
dc.citation.volume 42 en_US
dc.contributor.authoreid jpeters en_US
dc.contributor.authoreid jleather en_US
dc.contributor.authoreid jwilliam en_US


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