Testing policies for drinking water utilities to reduce non-point source pollution under climate variability

Date
2016
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University of Delaware
Abstract
This research will focus on the challenges faced by drinking water utilities due to extreme weather events. The higher occurrence of extreme weather events due to climate change is expected to lead to increased non-point source pollution from agricultural land. Using experiments with students we study behavioral responses towards various policies that can reduce non-point source pollution. Specifically, we study responses toward ambient (output-based) verses targeted (input-based) subsidies to improve water quality under various weather scenarios. We find behavior changes with the type of subsidy offered due to differences in risk allocation. Under ambient policy, the risk is shared with the entire group while targeted policies involve individual risk. People that are risk-averse tend to prefer input-based policies more because they are given perfect information. Our results suggest both ambient and targeted subsidies work to improve social welfare and decrease pollution. We find that input-based subsidies, that could be implemented with real time sensing technology, are best to minimize the economic and social cost to the drinking water utility. In addition, the results of the experiment show that as weather variability increases and there is a greater likelihood of extreme events, both policies become more effective, resulting in lesser pollution. ☐ Key Words: Nonpoint source pollution, Laboratory economic experiment, Extreme Weather
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