Marketable permits for the control of phosphorus effluent into Lake Michigan

Abstract

Transferable discharge permits (TDP) can be used to achieve desired abatement levels at costs that approach the minimum. The emphasis in the discussion is on the implementation of such a system, the public choice problem in its adoption, and an assurance that regardless of which polluters provide waste treatment there is a mechanism for equitable sharing in the costs ofthat abatement. The argument is applied to phosphorus abatement in the Wisconsin portion of the Lake Michigan basin. The level of demand and supply for TDP's among 53 waste treatment plants is simulated, and the necessary steps to create a market are outlined. Enforcement, price changes, and future adjustments in the permissible effluent loading are shown to be compatible with the marketing process proposed.