A new direction for evaluating pollution policy is proposed, focused on optimal investment pathways for mitigation capital. The approach allows practitioners to draw directly from key principles in the diffusion literature. A two-stage, policy-development framework is introduced. The first stage consists of empirical modelling to assess optimal diffusion pathways for diverse mitigation options. The second involves determining the relative strengths of different policy actions to address diffusion rates or maximum levels of adoption that diverge from optimal levels. The advantages of this new approach are demonstrated in an agri-environmental context, concerning the off-site impacts of intensive agriculture on water quality. The viewpoint provided by the novel approach establishes the importance of adoptability – alongside the traditional measures of abatement effectiveness and cost – for mitigation practices in policy assessment. The key role that durable mitigation capital plays in addressing dynamic externalities is demonstrated, alongside the importance of structured diffusion cascades for alternate mitigation options.
|Number of pages||29|
|Journal||Australian Journal of Agricultural and Resource Economics|
|Publication status||Published - 1 Apr 2019|