Gains of integrating sector-wise pollution regulation: the case of nitrogen in Danish crop production and aquaculture
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This paper extends the Orani-G Computable General Equilibrium model with an externality market. The externality market is modelled with a limited number of pollution permits that are traded between representative firms in different sectors. The model is applied to identify the gains of a common nitrogen regulation system for Danish agriculture crop and aquaculture production. Common regulation across the two sectors is found to increase GDP by euro 32 million, corresponding to 2.2% of their initial GDP contribution. The direct effect in the two sectors is euro 39 million, where the spill-over effect is − 7 million. Full use of recirculation technology in aquaculture entails a further increase in GDP to 106 million. The introduction of a common regulatory system and recirculation technology, simultaneous with a reduction of the common nitrogen cap of 17.6%, corresponding to the current policy objectives, is found to increase GDP by 52 million, 4.1% of their initial contribution. Hence, introducing a common regulatory system and taking advantage of the new technology more than counterbalances the negative socio-economic effect of a cap reduction. The analysis points to the importance of introducing more coherent regulatory frameworks that include all polluters under the same regulatory system.
Originalsprog | Engelsk |
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Tidsskrift | Ecological Economics |
Vol/bind | 129 |
Sider (fra-til) | 172-181 |
Antal sider | 10 |
ISSN | 0921-8009 |
DOI | |
Status | Udgivet - 2016 |
ID: 164133482