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Chapter 3. ECONOMIC ASPECTS OF EUTROPHICATION

Introduction

The economic dimensions of eutrophication are considered in this chapter. As was described in Chapter 1, eutrophication is viewed as a problem associated with domestic, agricultural and industrial activities: factories processing foodstuffs, fertilizer application in agriculture and municipal sewage discharge. Furthermore, eutrophication can detrimentally affect a range of activities that involve the direct or indirect use of water. Factories discharge effluent to save money, agriculture applies inorganic fertilizer to boost output and profits, waste from raising animal is costly to collect and treat, sewage is inadequately treated because of the cost of more complete treatment and, in many cases, the reluctance of customers to bear the extra cost. Water users incur higher costs or tolerate lower water quality as a result of eutrophication.

This chapter addresses two basic questions faced by regulatory authorities in designing policies to reduce nutrient loadings. Since those generating pollutants are often doing so for economic reasons, an important question concerns what economic incentives can be put in place to encourage a reduction in nutrient loadings. A second question concerns how a regulatory authority weighs all of the positive and negative economic effects of reducing nutrient loadings in order to choose an appropriate set of interventions in the economy. The sectors producing pollution are often important to local economies; imposing extra costs may lead to job loss and other undesirable consequences. On the other hand, many sectors of the economy as well as residents will benefit from reductions in eutrophication. Regulatory authorities will want to evaluate both the positive and negative aspects of controlling eutrophication.

This chapter consists of three parts. In the first part we review the problem of eutrophication through the lens of economics, introducing concepts and highlighting the economic reasons for eutrophication problems. In the second part we turn to the economic dimensions of regulatory approaches for controlling eutrophication. In the third part we consider how the costs and benefits of controlling eutrophication can be measured and tallied.

Table of Contents

• Brochure
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• International Year of Forests
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• World Environment Day
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