Testing the Potential to Implement Collective Enforcement Agreements in Point-Nonpoint Source Pollution Trading and Voluntary Incentive AgreementsEPA Grant Number: R828627
Title: Testing the Potential to Implement Collective Enforcement Agreements in Point-Nonpoint Source Pollution Trading and Voluntary Incentive Agreements
Investigators: Sohngen, Brent , Randall, Alan
Institution: The Ohio State University
EPA Project Officer: Lee, Sonja
Project Period: September 1, 2000 through August 30, 2002 (Extended to June 30, 2004)
Project Amount: $200,291
RFA: Market Mechanisms and Incentives for Environmental Management (2000) RFA Text | Recipients Lists
Research Category: Economics and Decision Sciences
This project tests whether collective enforcement mechanisms can be used to achieve water quality improvements from groups of farmers within a watershed. Collective enforcement arrangements hold groups of farmers responsible for reductions in pollution, and allow the group to determine collectively how to allocate payments for pollution abatement to individuals. The basic notion is that farmers are more suited to understanding how their own and their neighbor's land management practices affect pollution outputs than distant entities. Cost savings arise because collective arrangements focus on performance rather than specific abatement technology, and flexibility in abatement technology choice may promote further innovation.
The collective enforcement mechanisms developed here are hypothesized to be more acceptable to stakeholders than others suggested in the economic literature. This research goes beyond existing studies by testing the mechanisms with focus groups, and eventually implementing them in a watershed. The specific objectives of this proposal are to: (1) develop and refine a collective enforcement mechanism; (2) test and refine the mechanism among groups of farmers in watersheds; (3) work with stakeholders to implement the resulting mechanism; and (4) develop empirical trading models of point and nonpoint source trading to estimate efficiency gains.
An initial set of three focus groups will assess farmer understanding of collective enforcement arrangements and willingness to participate. Tests of the mechanism will occur in two additional focus groups. The project will work with a watershed group to secure funds for implementing the mechanism. Economic models will be developed to assess potential cost savings.
The collective arrangements designed by this research will help reduce the costs of achieving pollution reductions with existing voluntary incentive programs, such as Section 319 of the Clean Water Act. Because the arrangements are likely to be more efficient, they can also be used in point-nonpoint pollution trading programs to reduce the high trading ratios and transactions costs that hinder many existing programs. Collective enforcement arrangements may provide a mechanism to include nonpoint sources in the TMDL initiative.