Policy choice and riverine water quality in developing countries: An integrated hydro-economic modelling approach

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Abstract

Industrialization and urbanization, as a result of rapid economic development, have led to the deterioration of water quality in many rivers in developing countries. The Kelani River in Sri Lanka provides drinking water to Colombo and a range of market and non-market ecosystem services; but these services are threatened by deteriorating water quality. We apply a hydro-economic model that accounts for spatial patterns of water quality and abatement cost variability between firms in the catchment. The hydro-economic model combines a hydrological model of water quality with an economic optimization model to determine a cost-effective policy under alternate policy regimes. These include: the existing policy based on effluent concentration standards, effluent trading and effluent trading with multiple zones and an effluent tax. Tradeable permits with multiple zones are the least cost policy option that accounts for both spatial externalities and abatement costs. However, given current institutional capabilities, an effluent tax would be a more realistic second best policy as a transition from the current policy of effluent concentration standards to a policy based on the quantity of effluents.
Original languageEnglish
Pages (from-to)44-54
JournalJournal of Environmental Management
Volume227
DOIs
Publication statusPublished - Dec 2018

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developing world
effluent
water quality
economics
modeling
abatement cost
policy
river
cost
industrialization
ecosystem service
urbanization
economic development
drinking water
catchment
market
tax

Cite this

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title = "Policy choice and riverine water quality in developing countries: An integrated hydro-economic modelling approach",
abstract = "Industrialization and urbanization, as a result of rapid economic development, have led to the deterioration of water quality in many rivers in developing countries. The Kelani River in Sri Lanka provides drinking water to Colombo and a range of market and non-market ecosystem services; but these services are threatened by deteriorating water quality. We apply a hydro-economic model that accounts for spatial patterns of water quality and abatement cost variability between firms in the catchment. The hydro-economic model combines a hydrological model of water quality with an economic optimization model to determine a cost-effective policy under alternate policy regimes. These include: the existing policy based on effluent concentration standards, effluent trading and effluent trading with multiple zones and an effluent tax. Tradeable permits with multiple zones are the least cost policy option that accounts for both spatial externalities and abatement costs. However, given current institutional capabilities, an effluent tax would be a more realistic second best policy as a transition from the current policy of effluent concentration standards to a policy based on the quantity of effluents.",
author = "Ranasinghe Gunawardena and Benedict White and Atakelty Hailu and Sarath Wijeratne and Ram Pandit",
year = "2018",
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T1 - Policy choice and riverine water quality in developing countries: An integrated hydro-economic modelling approach

AU - Gunawardena, Ranasinghe

AU - White, Benedict

AU - Hailu, Atakelty

AU - Wijeratne, Sarath

AU - Pandit, Ram

PY - 2018/12

Y1 - 2018/12

N2 - Industrialization and urbanization, as a result of rapid economic development, have led to the deterioration of water quality in many rivers in developing countries. The Kelani River in Sri Lanka provides drinking water to Colombo and a range of market and non-market ecosystem services; but these services are threatened by deteriorating water quality. We apply a hydro-economic model that accounts for spatial patterns of water quality and abatement cost variability between firms in the catchment. The hydro-economic model combines a hydrological model of water quality with an economic optimization model to determine a cost-effective policy under alternate policy regimes. These include: the existing policy based on effluent concentration standards, effluent trading and effluent trading with multiple zones and an effluent tax. Tradeable permits with multiple zones are the least cost policy option that accounts for both spatial externalities and abatement costs. However, given current institutional capabilities, an effluent tax would be a more realistic second best policy as a transition from the current policy of effluent concentration standards to a policy based on the quantity of effluents.

AB - Industrialization and urbanization, as a result of rapid economic development, have led to the deterioration of water quality in many rivers in developing countries. The Kelani River in Sri Lanka provides drinking water to Colombo and a range of market and non-market ecosystem services; but these services are threatened by deteriorating water quality. We apply a hydro-economic model that accounts for spatial patterns of water quality and abatement cost variability between firms in the catchment. The hydro-economic model combines a hydrological model of water quality with an economic optimization model to determine a cost-effective policy under alternate policy regimes. These include: the existing policy based on effluent concentration standards, effluent trading and effluent trading with multiple zones and an effluent tax. Tradeable permits with multiple zones are the least cost policy option that accounts for both spatial externalities and abatement costs. However, given current institutional capabilities, an effluent tax would be a more realistic second best policy as a transition from the current policy of effluent concentration standards to a policy based on the quantity of effluents.

U2 - 10.1016/j.jenvman.2018.08.065

DO - 10.1016/j.jenvman.2018.08.065

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JO - Journal of Environmental Management

JF - Journal of Environmental Management

SN - 0301-4797

ER -