Alternative Pollution Standards for Regulating Nonpoint Source Pollution

Regulation of nonpoint source pollution is complicated by the unobservability of the effluent. Thus, control measures often focus on indirect approaches involving input use and management practices. This paper examines several regulatory standards that rely on observable characteristics, including restricting outputs and inputs which contribute to pollution. The theory shows that a pollution standard is more efficient than these alternatives, though the output standard can be as efficient. An empirical application to lettuce production in the Salinas Valley of California finds that restricting water use is virtually as efficient in reducing pollution as a pollution standard.