An Evaluation of Marketable Effluent Permit Systems
This report is a study of the practical problems and prospects of using marketable effluent permits as a water pollution control tool. Under such a system, pollution rights are contingent upon possession of permits; the permits are acquired and/or traded through an auction or market. This study details the requirements of MEP systems, discusses their theoretical advantages, and examines them through the use of industrial organization theory, comparisons with analogous markets, and a simulation model. The simulation model employs Mohawk River data to determine the effect of different system parameters on the operation of a MEP system. The legal and administrative aspects of the marketable permit system are also dealt with. The conclusion is that marketable permits are a promising control tool for many river basins.