Valuing water quality tradeoffs at different spatial scales: An integrated approach using bilevel optimization

Bostian, Moriah; Whittaker, Gerald; Barnhart, Bradley; Färe, Rolf; Grosskopf, Shawna

doi:10.1016/j.wre.2015.06.002

Cited by 39 publications

(15 citation statements)

References 59 publications

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“…There have been many studies evaluating the economic efficiency of particular policy mechanisms to reduce nitrogen pollution, including taxes or levies on fertilizer (Lansink and Peerlings 1997;Bostian et al 2015), easements (Wu and Tanaka 2005), a deposit-refund system (Hansen 1999), a market to trade permits to pollute (Hanson and McConnell 2008), incentive payments to encourage pollution reductions (Cooper and Keim 1996), quotas on the use of nitrogen fertilizer (Moxey and White 1994) and provision of information to farmers (Fleming et al 1998). Economists have undertaken studies to select the most effective policy mechanism for reducing nitrogen pollution (Drucker and Latacz-Lohmann 2003) and developed general frameworks for doing that (Pannell 2008).…”

Section: Policy-level Economicsmentioning

confidence: 99%

Economic perspectives on nitrogen in farming systems: managing trade-offs between production, risk and the environment

Pannell¹

2017

Soil Res.

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Economic insights are crucial for making sound decisions about farm-level management of nitrogen and also about regional or national policy such as for water pollution. In the present review, key insights are presented from a large and diverse literature on the economics of nitrogen in agriculture and the economics of the consequences of nitrogen fertilisation. Issues covered include (1) the economics of nitrogen as an input to production, (2) nitrogen and economic risk at the farm level, (3) the economics of nitrogen fixation by legumes, (4) the existence of flat payoff functions, which often allow wide flexibility in decisions about nitrogen fertiliser rates, (5) explanations for over-application of nitrogen fertilisers by some farmers, and (6) the economics of nitrogen pollution at both the farm level and the policy level. Economics helps to explain farmer behaviour and to design strategies and policies that are more beneficial and more likely to be adopted and successfully implemented.

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Section: Policy-level Economicsmentioning

confidence: 99%

Economic perspectives on nitrogen in farming systems: managing trade-offs between production, risk and the environment

Pannell¹

2017

Soil Res.

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“…These results match findings from previous studies. For example, Bostian et al (2015) found variation amongst the trade-offs between maximum profit and nitrogen loading from individual farms subject to a fertilizer tax policy in Oregon's Willamette Valley (USA). Also, Whittaker et al (2017) targeted multiple agri-environmental policies at the catchment, zip code (i.e., sub-catchment), and individual farm levels and found similar policy efficiency improvements.…”

Section: Discussionmentioning

confidence: 99%

Bilevel optimisation as a solution method for an agri-environmental principal-agent problem

Barnhart¹,

Bostian²,

Hasan³

et al. 2019

El Sawah, S. (Ed.) MODSIM2019, 23rd International Congress on Modelling and Simulation.

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Recent computational advances in environmental modelling have enabled modellers to predict the impacts of spatially distributed management practices on environmental quality throughout agricultural, forested, urban, and mixed-use watersheds. In addition, real and hypothetical incentive policies-as well as the interactions between policymakers and policy followers-have been simulated using agent-based modelling techniques as well as optimisation and multi-criteria decision-making methods. In this paper, we use bilevel optimisation as a solution method for solving an agri-environmental principalagent problem-that is, to create spatially targeted environmental incentive policies to improve water quality. In constructing the problem and solution framework, we draw parallels between agent-based and bilevel approaches as means to simultaneously consider both the objectives of the policymakers and policy followers. Our case study investigates the Tully catchment, which is dominated by sugar cane farming and a major contributor of nutrient runoff from northeastern Australia to the Great Barrier Reef Lagoon. We compare uniform and spatially targeted policies that offer payments for agricultural producers to implement discrete reductions in fertilizer application rates, and the resulting policy solutions highlight the optimal trade-offs between policy cost and nutrient reductions. In addition, we show that targeting policy incentives based on soil type achieves greater efficiencies (i.e., less policy cost, and less nutrient runoff) than simply offering different incentives for each fertilizer reduction. By leveraging knowledge of the spatial distribution of soil type throughout the catchment, our results suggest that policymakers can construct more efficient policies that will ensure adoption and achieve considerable nutrient load reductions at feasible costs. This framework for optimizing incentive policies could be extended to include more complicated and realistic policy options, and it could also be applied in other watersheds dominated by agricultural, forested, urban, and mixed land uses.

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“…Several simplifying assumptions were used, which took into consideration population levels, economic activity, as well as water volume and quality in the lake. The relationship between the water pollution level and the damage to the lake ecosystem was modeled using a steady-state approach (Hein, 2006;Bostian et al, 2015). This approach does not fully reflect the dynamic behavior of pollution.…”

Section: Social Optimization Model Of Wastewater Treatment and Dischargementioning

confidence: 99%

Economics of social trade-off: Balancing wastewater treatment cost and ecosystem damage

Dinar

Hellegers

2018

Journal of Environmental Management

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We have developed a social optimization model that integrates the financial and ecological costs associated with wastewater treatment and ecosystem damage. The social optimal abatement level of water pollution is determined by finding the trade-off between the cost of pollution control and its resulting ecosystem damage. The model is applied to data from the Lake Taihu region in China to demonstrate this trade-off. A wastewater treatment cost function is estimated with a sizable sample from China, and an ecological damage cost function is estimated following an ecosystem service valuation framework. Results show that the wastewater treatment cost function has economies of scale in facility capacity, and diseconomies in pollutant removal efficiency. Results also show that a low value of the ecosystem service will lead to serious ecological damage. One important policy implication is that the assimilative capacity of the lake should be enhanced by forbidding over extraction of water from the lake. It is also suggested that more work should be done to improve the accuracy of the economic valuation.

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Valuing water quality tradeoffs at different spatial scales: An integrated approach using bilevel optimization

Cited by 39 publications

References 59 publications

Economic perspectives on nitrogen in farming systems: managing trade-offs between production, risk and the environment

Economic perspectives on nitrogen in farming systems: managing trade-offs between production, risk and the environment

Bilevel optimisation as a solution method for an agri-environmental principal-agent problem

Economics of social trade-off: Balancing wastewater treatment cost and ecosystem damage

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