MARKET AND BARGAINING APPROACHES TO NONPOINT-SOURCE POLLUTION-ABATEMENT PROBLEMS

The ability of a market type mechanism to significantly reduce the com pliance costs of current state and national erosion standards is inves tigated. The ability of such an institution when applied to a recursiv ely produced pollutant such as sediment from agricultural Land is, how ever, extremely sensitive to the order in which contracts are executed . The gain-ranked order of contracting is found to result in a larger reduction in costs than the mean cost reduction calculated under a ran dom order of contracting. The degree to which actual contracting more closely corresponds to the random or gain-ranked order is, therefore, of importance given the desirability of achieving a sediment load at t he least cost possible.