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Nutrient Trading Between Wastewater Treatment Plants in the Baltic Sea Region

  • Sami Hautakangas
  • Markku Ollikainen
Article

Abstract

We analyze nutrient trading between wastewater treatment plants as a tool for reducing nitrogen and phosphorus loads in the Baltic Sea. We build a numerical model and demonstrate that the goals of the Baltic Sea Action Plan can be achieved to a fairly large extent by nutrient trading between wastewater treatment plants. It is also a relatively inexpensive way to reduce nutrient loads. Furthermore, a nutrient trading scheme with properly designed initial allocations enables an evening out of the cost burden between wastewater treatment plants. We study alternative types of nutrient trading schemes and show that when trading is based on nitrogen equivalents, phosphorus abatement reaches its capacity limits. Moreover, we illustrate that transaction costs clearly increase the level of nitrogen abatement costs but only slightly the level of phosphorus abatement costs. Nevertheless, even though transaction costs reduce benefits from trading relative to command-and-control, huge cost differences between the installations create space for trading.

Keywords

Baltic Sea Cost-effectiveness Environmental policy Eutrophication control Nitrogen Nutrient abatement cost Nutrient reduction Nutrient trading Phosphorus Wastewater treatment 

Abbreviations

BAT

Best available technology

BSAP

Baltic Sea Action Plan

EPA

Environmental Protection Agency

ETS

Emissions trading scheme

EU

European Union

GDP

Gross domestic product

HELCOM

Baltic Marine Environment Protection Commission–Helsinki Commission

MAC

Marginal abatement cost

MTC

Marginal transaction cost

NEFCO

Nordic Environment Finance Corporation

NTS

Nutrient trading scheme

PE

Person equivalent

TAC

Total abatement cost

UWWTD

Urban Waste Water Treatment Directive

WFD

Water Framework Directive

WQT

Water quality trading

WWTP

Wastewater treatment plant

Supplementary material

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Supplementary material 1 (DOCX 21 kb)
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Supplementary material 3 (DOCX 18 kb)
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Supplementary material 4 (DOCX 14 kb)

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Copyright information

© Springer Nature B.V. 2018

Authors and Affiliations

  1. 1.Department of Economics and ManagementUniversity of HelsinkiHelsinkiFinland

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