Water-quality trading: Can we get the prices of pollution right?

Yoshifumi Konishi, Jay S. Coggins, Bin Wang

Research output: Contribution to journalArticlepeer-review

9 Scopus citations


Water-quality trading requires inducing permit prices that account properly for spatially explicit damage relationships. We compare recent work by Hung and Shaw (2005) and Farrow et al. (2005) for river systems exhibiting branching and nonlinear damages. The Hung-Shaw scheme is robust to nonlinear damages, but not to hot spots occurring at the confluence of two branches. The Farrow et al. (2005) scheme is robust to branching, but not to nonlinear damages. We also compare the two schemes to each other. Neither dominates from a welfare perspective, but the comparison appears to tilt in favor of the Farrow et al. scheme.

Original languageEnglish (US)
Pages (from-to)3126-3144
Number of pages19
JournalWater Resources Research
Issue number5
StatePublished - May 1 2015

Bibliographical note

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© 2015. American Geophysical Union. All Rights Reserved.


  • branching
  • nonlinear damages
  • spatially explicit prices
  • trading ratios
  • water-quality trading


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