Regulation in Environmental Markets: What can we learn from Experiments to Reduce Salinity?

Market based mechanisms are growing in importance in environmental policy making. In theory market based mechanisms equate marginal abatement costs between polluting sources, thereby allocating emissions control responsibility at least cost. The step from theory to field implementation is, however, difficult, as many aspects of policy must be made operational at the same time. Policy mistakes can be very costly to society and are extremely difficult to correct ex-post. Experimental Economics is an innovative method beginning to be used to design, test and illustrate public policy prior to field implementation. In this paper we discuss two types of market incentives, taxes and tradable emissions permits. We then illustrate an experiment being implemented to test these market mechanisms for the management of salinity in the Murray Darling Basin.


Issue Date:
2005
Publication Type:
Journal Article
Record Identifier:
http://ageconsearch.umn.edu/record/137857
PURL Identifier:
http://purl.umn.edu/137857
Total Pages:
18
JEL Codes:
Q24; Q28; C9




 Record created 2017-04-01, last modified 2018-01-22

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