Economics of Nonpoint Pollution

Nonpoint source pollution poses distinctive challenges to theoretical analysis as well as practical policy formulation and implementation These challenges stem in part from a defining characteristic of nonpoint pollution - the inability to meter nonpoint emissions from individual nonpoint polluters routinely at a reasonable cost. They are also the result of the inherent stochasticity of nonpoint pollution and the complex, heterogeneous, nonlinear relationships that exist between human activities that cause nonpoint emissions and the environmental impacts of those emissions. Economists have proposed innovative instruments for nonpoint pollution that have good efficiency properties in theory, but which may be highly impractical in real-world settings. Policy advances that are essential to manage nonpoint pollution efficiently are problem-specific computational investigations that integrate economic models with biophysical models of environmental processes to explore second best designs and mixtures that explicitly address not only incentive structures to induce efficient abatement but also the information and administrative costs that emerge from the inherent spatial, temporal, and technological complexity of the problem.