The Environmental Trading Problem

Abstract

The increasing stringency of environmental regulations and the global rise of concerns about the environmental impact of industrial production have led to an increased focus on waste management decisions as a component of industrial sustainability. Pollutant credit trading , an approach that provides economic incentives for reducing pollution, is one novel idea introduced in an attempt to reduce the financial burden of waste management . Both the US Environmental Protection Agency (USEPA) and the US Department of Agriculture (USDA) seek to promote this type of market-based solution . However, industry-level decision making under a pollutant trading scheme faces many difficulties, especially in the presence of uncertainty. In this chapter, the L-shaped BONUS algorithm is applied to the pollutant trading problem to optimize such decisions. This chapter is based on the paper by Shastri and Diwekar .

Notations

$b_{NPS}(j)$ :

nonpoint source abatement efficiency of chemical j

c _n (j):

cost for the nonpoint source discharge reduction of chemical j, expressed as dollars/area

$c_p(i,j)$ :

cost of treating chemical j at point source i, expressed as dollars/mass

D(i):

total volumetric discharge from point source i, expressed as volume/time

$e_{p0}(i,j)$ :

pretreatment discharge quantity of chemical j from point source i, expressed as mass/volume

$e_{n0}$ :

pretreatment discharge quantity of chemical j from the nonpoint source, expressed as mass⋅area/time

$L(i,j)$ :

land allocated for trading by point source i to treat chemical j

$L_{max}$ :

maximum amount of nonpoint source land available for trading, expressed as area

M :

number of regulated chemicals

n :

a particular sample from the uncertain space

$N_{samp}$ :

the sample size used to represent the uncertain space in the optimization algorithm

P :

number of point sources

$q_n(j) = e_{n0}(j)$ :

abatement in nonpoint source discharge of chemical j, expressed

$b_{NPS}(j)$ :

as mass⋅area/time

$q_p(i,j)$ :

discharge abatement of chemical j at PS i (expressed as mass/volume)

R :

recourse function

$z_{red}(ij)$ :

targeted reduction in discharge of chemical j by point source i (expressed as mass/time)

$z_{allowed}(j)$ :

maximum permitted discharge of chemical j at any single location (expressed as mass/time)

Greek letters

$\alpha_j$ :

cost exponent