Market Structures for U.S. Water Quality Trading

Richard T. Woodward, Ronald A. Kaiser
2002 Review of Agricultural Economics  
The use of transferable discharge permits as a water pollution control policy is rapidly increasing in the United States. Drawing on evidence from existing water quality trading programs, this paper provides a taxonomy of the forms that such markets take. Four main structures are identified: exchanges, bilateral negotiations, clearinghouses, and sole-source offsets. Each of these structures has its own strengths and weaknesses; none is optimal for all scenarios. Since market structure is
more » ... determined by a program's rules, policy makers should be aware of the differences between these structures and the conditions under which each comes to be.
doi:10.1111/1467-9353.00025 fatcat:qlpxao5svjb6tcveofruv5mg2i