The economics of eutrophication

Abstract

This chapter focuses on how economists deal with nonpoint source pollution where individual farm field emissions are not observed. This causes problems for the standard emissions marginal abatement cost framework used in environmental economics as it renders emission-oriented policy instruments not applicable. The advantages and disadvantages of the three main approaches of dealing with this issue–procedural regulations, input regulations, and regulations formulated to solve the information asymmetry issues–are briefly summarized. Finally, a brief overview on computable economic modeling is given.