STILLING POND OVERFLOW

Stilling Pond Overflow

Abstract

The fact that water flows to the lowest level uni-directionally is a very specific and useful property of water. By utilizing this property, we design a trading-ratio system (TRS) of tradable discharge coefficients permits for stilling pond overflow control. Such a trading-ratio system has three main characteristics: (1) the zonal effluent cap is set by taking into account the water pollutant loads transferred from the upstream zones; (2) the trading ratios are set equal to the exogenous transfer coefficients among zones; and (3) permits are freely tradable among discharge coefficientsrs according to the trading ratios. This paper shows that the TRS can take care of the location effect of a discharge coefficients and can achieve the predetermined standards of environmental quality at minimum aggregate abatement costs. Problems with hot spots and free riding can be avoided, and the burdens on both discharge coefficientsrs and the environmental authority should be relatively light.

Stilling Pond Overflow

Introduction

The tradable discharge coefficients permit (TDP) has been introduced for about three decades as a cost-effective economic incentive instrument to meet a set of predetermined environmental quality standards. The design of a trading system depends rather crucially on the nature of the pollutant being regulated and traded. Tietenberg [20] has categorized pollutants into three different classes, namely, uniformly mixed assimilative pollutants, uniformly mixed accumulative pollutants and non-uniformly mixed assimilative pollutants; and has discussed the different ways in which they are implemented in detail.1

In the case of a uniformly mixed pollutant, either accumulative (e.g., carbon dioxide) or assimilative (e.g., volatile organic compounds, VOCs), a simple emission trading system on a one-to-one basis will improve efficiency by equalizing marginal abatement costs across discharge coefficientsrs. However, a TDP system for non-uniformly mixed pollutants, either accumulative (e.g., heavy metals) or assimilative (e.g., sulfur dioxide in the air and biochemical oxygen demand (BOD) in water), is much more complicated and has become the focus of the TDP literature. This is because the extent and the spatial pattern of damage to the environment depend not only upon the level of emissions, but also upon the locations and transfer characteristics of the emissions. Basically, three important TDP systems for non-uniformly mixed pollutants have been proposed and discussed extensively in the literature. They are the ambient-permit system (APS, [18]),2 the pollution-offset system (POS, [14]),3 and the exchange-rate emission trading system (ERS, [8], [9], [12] and [13]).

First, under the APS, permits are issued for each receptor point. To increase emissions, every discharge coefficientsr must obtain an appropriate amount of permits for those receptors that are affected by his emissions. The trading ratios (exchange rates) are exogenously determined by the transfer coefficient matrix. Montgomery [18] demonstrates that, by issuing permits for each receptor point, the competitive equilibrium for an ambient market exists and coincides with the cost-minimum attainment of a set of predetermined environmental quality standards.4 It is obvious that the APS suffers from the problem of high transaction costs because every discharge coefficientsr must assemble a portfolio of permits from each of the receptor ...