Tradable Permits under Threat to Manage Nonpoint Source Pollution

Ali , Mourad
        INRA
         .
         UMR 1135 Laboratoire Montpelliérain d'Economie Théorique et Appliquée; Le Grusse , Philippe
        .; Rio , Patrick
        INRA
         .
         UMR 1135 Laboratoire Montpelliérain d'Economie Théorique et Appliquée

Tradable Permits under Threat to Manage Nonpoint Source Pollution

2008

Ali , Mourad (INRA (France). UMR 1135 Laboratoire Montpelliérain d'Economie Théorique et Appliquée) | Le Grusse , Philippe (Centre International de Hautes Etudes Agronomiques Méditerranéennes(France).) | Rio , Patrick (INRA (France). UMR 1135 Laboratoire Montpelliérain d'Economie Théorique et Appliquée)

In this article we treat the problemof nonpoint source pollution as a problem of moral hazard in group. To solve this kind of problemwe consider a group performance based tax coupled to tradable permits market. The tax is activated if the group fails to meet the ambient standard. So the role of the tax is to provide an incitation to ensure that the agents provide the abatement level necessary to achieve the standard. The role of the tradable permits market is to distribute effectively this abatement level through the price of the permits which rises with the exchange of the permits.

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