Adaptive Cost-Effective Ambient Charges under Incomplete Information

Established opinion is that in the face of uncertain information on pollution control costs, environmental agencies cannot set ambient charges that enable the realization of desired concentration levels at multiple receptors in a cost-effective way. Although a trial-and-error procedure could result in attainment of concentration standards this would generally not be cost-effective. This paper, however, proves that environmental agencies can develop charge adjustment procedures that achieve ambient standards at multiple receptors at minimum costs. The procedure is applied to a case study for acidification in the Netherlands. The results show that the iterative procedure approaches the cost-effective emissions fairly quickly.