A tradable emissions permit program for nitrogen in Lake Taupo

摘要

Economists have often advocated the use of market mechanisms to control access to valuable natural resources on the grounds of economic efficiency.The equity implications of creating property rights and markets are less frequently raised.Yet an understanding of equity issues is critical to making informed social and political judgments about the merit of new property right systems.We discuss some of the critical wealth and equity issues involved in the setting of a water quality standard and the allocation of property rights in relation to that standard.The discussion is based on a proposed market in nitrogen emission permits in Lake Taupo, New Zealand which will include diffuse source emissions from pastoral agriculture.The setting of the water quality standard influences the distribution of adjustment costs between landholders and the rest of the community, while the allocation of emission permits influences the distribution of adjustment costs among landholders.