relation: https://orgprints.org/id/eprint/16452/
title: (In)Efficient management of interacting environmental bads
creator: Kuosmanen, Timo
creator: Laukkanen, Marita
subject:  Environmental aspects
description: Many environmental problems involve the transformation of multiple harmful substances into one or more damage agents much in the same way as a firm transforms inputs into outputs. Yet environmental management differs  from a firm's production in one important respect: while a firm seeks efficient input allocation to maximize profit, an environmental planner allocates abatement efforts to render the production of damage agents as inefficient as possible. We characterize a solution to the hmultiple pollutants problem and show that the optimal policy is often a corner solution, in which abatement is focused on a single pollutant. Corner solutions may arise even in well-behaved problems with concave production functions and convex damage and cost functions. Furthermore, even concentrating on a wrong pollutant may yield greater net benefits than setting uniform abatement targets for a harmful substances. Our general theoretical results on the management of flow and stock pollutants are complemented by two numerical examples illustrating the abatement of eutrophying nutrients and greenhouse gases.
publisher: MTT Agrifood Research Finland
date: 2009
type: Report
type: NonPeerReviewed
format: application/pdf
language: en
identifier: /id/eprint/16452/1/discuss5.pdf
identifier:    Kuosmanen, Timo and Laukkanen, Marita         (2009) (In)Efficient management of interacting environmental bads.    MTT Agrifood Research Finland.