Programme  Poster session 2  abstract 597

Cost-effective abatement of water pollution from agricultural sources classified in risk classes

Author(s): Tihomir Ancev, Robert Lifran, Nicholas Tan

Keyword(s): abatement, cost-effectiveness, water pollution

Article: abs597_article.pdf
Poster: abs597_poster.pdf
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Session: Poster session 2
Water pollution from agricultural sources is plagued with uncertainty of various proveniences. In the

face of this uncertainty, catchment management authorities in Australia and elsewhere have been recently attempting

to classify agricultural areas in their catchments in so called ‘risk classes’ according to their potential to contribute to

ambient water pollution. This classification is intended to be used to aid decision making in relation to allocating

financial assistance to supporting abatement.

The objective of the paper is to examine the

classification of agricultural areas in ‘risk classes’ from an economic perspective, and to explicitly establish the link

between the underlying uncertainty and ‘risk classes’. A specific objective is to determine the significance of the

classification in ‘risk classes’ for making decisions about allocating efficient level of abatement to agricultural areas in

the catchment. In particular, the principle of achieving most reduction of water pollution per monetary unit spend on

abatement is applied to the ‘risk classes’.

The paper uses analytical economic methods to

conceptualise the problem and to derive optimality conditions.

It is found that classification in risk

classes is nothing more than expressing the uncertainty about pollution loading parameter from given agricultural

areas in discrete groups of expected realisations. Further, this classification tends to imply that priority should be

given to abatement efforts in areas classified as high-risk. The paper shows that this is not the case, and that

abatement should be prioritised according to the cost-effectiveness criterion.

The key

conclusion from the paper is that financial assistance for abatement should be offered to those agricultural areas

where greatest expected reduction of ambient water pollution can be achieved at least-cost. Those agricultural areas

are not necessarily coinciding with the agricultural areas classified into ‘high risk classes’.

Conference sub-topic:


quality management: surface and ground water


Economic instruments and water pricing

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