Cost-Effective Control of Interdependent Water Pollutants

Abstract

Excess nutrient loads to coastal waters lead to increased production of algae, which when decaying cause oxygen depletion in bottom sediments, which in turn leads to major changes in marine ecosystems. A cost-minimization model was investigated in which nitrogen and phosphorus were assumed to interact with respect to algae production. It was investigated under what conditions only a single nutrient should be decreased and when it is cost-effective to decrease both nutrients. The model was applied to the Baltic Proper, which is the largest of the seven major basins in the Baltic Sea. Results showed that the stringency of the environmental target, as well as assumptions regarding substitutability between nutrients, are important factors to determine the nutrient on which to focus. Uniform decrease rates for emissions are often used in international agreements, and the results of this model showed that the costs of making such proportional decreases could be substantial.

Appendix

Cost functions were fitted to data using ordinary least squares regression (OLS). A log-linear specification, $\ln c_{ri} \left( {e_{ri} } \right) = \beta _1 + \beta _2 \ln \left( {e_{ri}^0 - e_{ri} } \right)$, was assumed. The coefficients are shown in Table A. Costs are expressed in SEK 1997 and emissions in tons. The marginal costs are expressed in SEK/kg N the same year. SEK = Swedish crowns.

Table A Coefficients of cost functions.^a