Establishing a benchmark for comparing relative cost-effectiveness of an alternative policy instrument for controlling non-point source pollution

B Grové,L.K Oosthuizen

doi:10.4314/wsa.v33i5.184019

Abstract

Knowledge about economic environmental tradeoffs is a prerequisite to evaluate the relative cost-effectiveness of alternative policy instruments to control non-point source pollution (NPS). Failure to explicitly account for the impact of the spatial combination of alternative management practices on pollution contribution rates while quantifying these tradeoffs may cause relative comparisons between alternative policy instruments to control NPS pollution inappropriate. The main objective of this research is to develop a spatial decision support system able to quantify cost-effective economic environmental tradeoffs of maintaining alternative pollution standards taking the interrelated linkages between various agricultural management practices into account. The system is used to establish a benchmark tradeoff curve by means of which alternative policy instruments to control NPS pollution can be compared to determine their relative cost-effectiveness. Tradeoff analyses indicated that the pollution contribution factor plays a cardinal role in determining pollution abatement cost and therefore the benchmark. The importance of the contribution factor highlights the necessity of taking the interdependencies between management units into account when modelling economic environmental tradeoffs. Catchment level tradeoffs showed that the nitrate water quality indicator can be improved with little cost due to both positive and negative tradeoffs at the sub-catchment level. Significant variability exists at the sub-catchment level when nitrate pollution abatement and abatement cost are concerned. The conclusion is that care should be taken not to compare the relative cost-effectiveness of alternative policy instruments to control NPS pollution based on catchment level tradeoffs alone.

Highlights

Past efforts to protect the quality of South Africa’s water resources were concentrated mainly on the control of effluents from point sources
For instance Sub 7 and Sub 9 has to abate more or less the same amount of pollution to improve water quality by 90% but Sub 7 has a gross margin of about 50% more than baseline level whereas Sub 9 has an abatement cost of about 50%
Cognisance should be taken of the fact that the pollution contribution factor plays a cardinal role in determining pollution abatement cost

Summary

Introduction

Past efforts to protect the quality of South Africa’s water resources were concentrated mainly on the control of effluents from point sources. Cost-effective outcomes define actions that would optimally be taken to satisfy NPS pollution policy goals in an ideal world where the set of policy instruments is not restricted and there are no transaction costs associated with implementing optimally designed policies (Ribaudo et al, 1999). Given these conditions cost-effective solutions are rarely attained in practice. A cost-effective solution provides a benchmark to compare the cost-effectiveness of alternative policy instruments that are used to combat pollution

Objectives

Findings

Conclusion