Distribution methods for transferable discharge permits

Abstract

A mathematical model has been developed to simulate the operation of a single‐price auction of transferable discharge permits. Permits may be sold at auction by the control authority or may be given, free of charge, to the dischargers according to some agreed‐upon formula and subsequently redistributed by a similar auction. The sales method and four alternative free allocation schemes are compared through the example case of phosphorus discharge from point sources in the Wisconsin‐Lake Michigan watershed.