EPA-600/5-74-030
September 1974
Socioeconomic Environmental Studies Series
.n Evaluation of Marketable
Effluent Permit Systems
Office of Research and Development
U.S. Environmental Protection Agency
Washington, D.C. 20460
-------
RESK7VRCH r:;"ORTING SHRIES
Research reports of the Office of Research and Development,
Environn-ntal Protection Agency, have been qrouped into five
series. These five broad categories were established to
facilitate further development and application of environmental
technology. Elimination of traditional grouping was consciously
planned to foster technology transfer and a maximum interface
in related fields. The five series are:
1. Environmental Health Effects Research
2. Environmental Protection Technology
3. Ecological Research
4. Environmental Monitoring
5. Socioeconomic Environmental Studies
This report has been assigned to the SOCIOECONOMIC ENVIRONMENTAL STUDIES
series. This series describes research on the socioeconomic impact of
environmental problems. This covers recycling and other recovery
operations with emphasis on monetary incentives. The non-scientific
realms of legal systems, cultural values, and business systems are
also involved. Because of their interdisciplinary scope, system
evaluations and environmental management reports are included in this
series.
This report has been reviewed by the Office of Research and
Development. Approval does not signify that the contents
necessarily reflect the views and policies of the Environmental
Protection Agency, nor does mention of trade names or commercial
products constitute endorsement or recommendation for use.
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $4.16
-------
EPA-600/5-7^-030
September
AN EVALUATION OF MARKETABLE EFFLUENT PERMIT SYSTEMS
By
Russell J. deLucia
Contract No. 68-01 -1882
Program Element No. 1BA030
ROAP 21AXN06
Project Officer
Dr. Marshall Rose
Washington Environmental Research Center
Washington, D. C. 20460
Prepared for
Office of Research and Development
U.S. Environmental Protection Agency
Washington, D.C. 20460
-------
ABSTRACT
This report is a study of the practical problems and
prospects of using marketable effluent permits (MEP) as a
water pollution control tool. Under such a system, pollu-
tion rights are contingent upon possession of permits; the
permits are acquired and/or traded through an auction or
market. This study details the requirements of MEP systems,
discusses their theoretical advantages, and examines them
through the use of industrial organization theory, compari-
sons with analogous markets, and a simulation model. The
simulation model employs Mohawk River data to determine the
effect of different system parameters on the operation of
a MEP system. The legal and administrative aspects of the
marketable permit system are also dealt with. The conclu-
sion is that marketable permits are a promising control tool
for many river basins.
11
-------
TABLE OF CONTENTS
PREFACE vii
Section 1 1
Introduction 1
Framework for the Study . . 1
Criteria for Evaluation of the MEP System .... 5
Organization of the Report 7
Section 2 10
The Marketable Effluent Permit System 10
The Method of Initial Distribution 16
Pollutants Included in the MEP System 22
The Term of Permits 32
Eligibility Requirements for Permit Holders ... 35
Hydrologic and Other Seasonal Variations .... 39
The Trading Rules and Procedures for the Market . 41
The Choice and Definition of Basins 42
Financial Aspects of the MEP System 42
Monitoring and Enforcement 43
The NPDES, Municipal Grant Programs,
and the MEP System 44
Section 3 51
Markets, Auctions, Externalities, and the
MEP System 51
The Theory of Markets 51
The Theory of the MEP System 53
Problems of Imperfect Competition 56
Section 4 61
Industrial Organization Theory and the MEP System . 61
Conduct Norms 63
Structure Norms 67
Conclusions 70
111
-------
TABLE OF CONTENTS (continued)
Section 5 ....................... 7
73
Analogous Auctions and Markets ....... . . . •
74
United States Treasury Bill Market ........
77
Taxi Medallion Markets ..............
79
Offshore Oil Leasing Market ............
80
Conclusions ....................
Section 6 ....................... 83
Mohawk River Simulation Model
The Mohawk Data .................. 84
The Simulation Model ............... ^1
The Simulation Results .............. 98
Simulations of Market Manipulating ........ 124
A Comparison with Effluent Charges ........ 131
Section 7 ....................... 135
Legal and Administrative Issues ........... 135
The Constitutional Basis of the MEP System .... 135
The MEP System and Taxation ............ 139
Enabling Legislation for the MEP System ...... 140
The MEP System and the NPDES ........... 143
Administrative Costs of the MEP System ...... 147
Section 8 ....................... 155
Evaluation and Comparison of the MEP System ..... 155
Details of the MEP System ............. 155
The MEP System Versus Effluent Charges and
Effluent Standards ................ 161
IV
-------
TABLES
Table 2-1: Hypothetical Order for Permits for
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
Table
6-1:
6-2:
6-3:
6-4:
6-5:
6-6:
6-7:
6-8:
6-9:
6-10:
6-11:
6-12:
6-13:
7-1:
a Dutch Auction
Mohawk River Basin Cities
Wastewater Treatment Costs .......
Inputs for the One-term Permit
Simulations
Inputs for the Staggered-term Permit
Simulations .....
Inputs for Additional One-term Permit
Aggregate Demand Schedule for Run 1
of the Mohawk Permit System Simulation
Responses of Bidders for Run 1 of the
Mohawk Permit System Simulation
Responses of Bidders for Run 1 of the
Mohawk Permit System Simulation
Summary Information for the Mohawk
Effluent Permit System Simulation ....
Difference Between the Results with
Utica as Price-Maker and the Results
of the Competitive Solution (Run 14) . .
Responses of Bidders for Run 11 of the
Mohawk Permit System Simulation
Ilion and Fort Plain as Price-Makers . .
The MEP Simulation vs the Effluent
Charge (EC) Model
Requirements of Marketable Permits
System Compared to Requirements of the
NPDES and of Effluent Permits
19
86
87
99
100
101
108
109
110
113
127
129
130
132
148
V
-------
FIGURES
Figure 2-1: Quality Standards and Ambient Quality
for a Hypothetical River Basin M
Figure 6-1: Demand Curve of Rome for Run 1 of the
Mohawk Permit System Simulation 104
Figure 6-2: Demand Curve of Utica for Run 1 of the
Mohawk Permit System Simulation 105
Figure 6-3: Aggregate Demand for Effluent Permits . . 106
Vi
-------
PREFACE
Water pollution legislation at the national level has re-
flected the increasing demand for clean water that is evident
today in the United States. Water pollution control has pro-
gressed from a health-motivated activity to one directed at
the enhancement of national water resources for recreational
and aesthetic purposes. The most recent legislation/ the 1972
Amendments to the Federal Water Pollution Control Act (here-
after referred to as the "Amendments" or the "1972 Amendments"),
is designed to reduce significantly the discharge of pollutants
into waterways with the complete elimination of discharges as
the ultimate goal of the legislation.
The idea of establishing a market to assist in the con-
trol of pollution has been discussed by economists and others
as a possible alternative to non-market control measures, such
as quantitative effluent standards. Under the economist's
standard assumptions concerning the workings of the marketplace,
a market in pollution discharge permits can be shown to have
many desirable properties, including the ability to allocate
waste treatment efficiently among polluters.
This report is a study of the practical problems and pros-
pects of using marketable effluent permits as one method of
implementing the 1972 Amendments. The purpose of the study is
to examine the efficacy of a market-oriented system of water
vii
-------
pollution control by raising and examining the important ques-
tions surrounding the use of such a system. This is done below,
Ultimately, however, the ability to predict whether and how
well a new market will perform depends on the assumptions that
one makes. Indeed, the analysis here of the probable strengths
and weaknesses of a market in pollutants depends critically on
the relevance of the economist's paradigm and its implications
about the behavior of market participants. Perhaps the strong-
est argument in favor of the use of a market in discharge rights
is that the economist's allegations concerning the workings of
the marketplace remain untested in pollution control in the
United States, while many other ideas have been tried and found
wanting.
Vlll
-------
NOTES
E.g., J. H. Dales, Pollution, Property, and Prices (Toronto,
1968).
IX
-------
Section 1
Introduction
Framework for the Study
This study examines the possibility of using a market-
able effluent permit (MEP) system as a water pollution con-
trol tool. A marketable effluent permit system is any one
of a number of control schemes in which (1) waste discharges
are prohibited unless the polluter holds permits providing
the requisite authorization and (2) those permits are acquired
through a market transaction. Stated somewhat differently,
a MEP system is a control system in which (1) polluters can
discharge wastes if and only if they hold a permit (or per-
mits) from the regulatory authority and (2) the effluent per-
mits are bought, sold, leased, rented, or in any way traded
by the participants (polluters, regulatory agency, and others)
of the system. This definition is a broad one which includes,
for example, control systems in which the regulatory agency
sells permits by auction to polluters, as well as systems in
which buying and selling of permits among polluters is sanc-
tioned. Several different MEP systems can be distinguished
depending on the kinds of market transactions that are al-
lowed, the pollutants that are covered, the participants
included in the system (e.g., municipalities and industrial
firms), etc. The primary question addressed in this report
-------
is whether a well-designed MEP system can be used to help
implement the provisions of the Amendments to the Federal
Water Pollution Control Act.
The first comprehensive national water quality legislation
was the Federal Water Pollution Control Act of 1948. The
Act has been amended several times, most recently with the
Amendments of 1972. Under the 1965 Amendments states were
required to establish water quality standards for interstate
and coastal waters and to formulate implementation plans for
achieving those standards. Any discharge which reduced the
quality of the receiving water below the established stan-
dards or that was in violation of the implementation plan
was subject to enforcement action. In 1970, difficulties
in enforcing the provisions of the Act led the Department
of the Interior (which was at that time responsible for
administration of the water pollution control program) to
invoke the Refuse Act of 1899 (Section 13 of the River and
Harbor Act) as the legal mandate to control waste discharges.
The Refuse Act prohibits the discharge or deposit of
wastes into navigable waters and their tributaries unless
authorized by a permit from the Secretary of the Army. En-
forcement measures including civil and criminal penalties
are provided to help enforce the provisions of the Act.
Starting in 1970 the Army Corps of Engineers received appli-
cations from dischargers for permits, determined the effect
-------
of the proposed discharges, and formally issued a permit to
the polluter. The Environmental Protection Agency (EPA) re-
viewed applications and advised the Corps as to whether to
issue a permit. This process proved cumbersome, and was
slowed even further when the Corps was enjoined from issuing
permits by a United States District Court judge. The injunc-
tion was based on two grounds: (1) the Refuse Act provides
for permits only for navigable waters and not their tribu-
taries (even though the Act prohibits waste discharges into
both); and (2) the Corps was found to be in violation of the
National Environmental Policy Act which requires an impact
statement covering the water quality aspects of Refuse Act
permits.
The stated goal of the 1972 Amendments is the elimination
by 1985 of the discharge of pollutants into navigable waters.
The emphasis of the new law is on effluent limitations, al-
though stream standards are to continue to play a role in
water quality management. At the time the 1972 Amendments
became law, the Corps was still enjoined from using the Refuse
Act permit program. The Amendments terminate the use of prior
enforcement mechanisms, including the Refuse Act permit pro-
gram and the use of enforcement conferences, and in their
place establishes a National Pollutant Discharge Elimination
System (NPDES).
-------
The specific control goals set by the 1972 Amendments
are:
1. the application by industrial sources of best
practicable control technology currently available
by 1977 and of best available technology economi-
cally achievable by 1983;
2. the application by municipalities of secondary
treatment by 1977 and of the best practicable waste
treatment technology by 1983;
3. the achievement of water quality standards by 1977.
Under the terms of the Act, the EPA is to identify the degree
of effluent reduction attainable through the application of
best practicable control and best available technology in
terms of amounts of the chemical, physical, and biological
constituents of pollutants. Best practicable treatment has
been interpreted by the EPA to be a process providing per-
centage waste removals similar to those effected by the sec-
ondary treatment of biological wastes (approximately 85 per-
cent) . The goals of the Amendments for 1983 have yet to be
translated by EPA into specific effluent limitations.
The 1972 Amendments do not ignore the concept of water
quality standards in attempting to achieve the 1977 and 1983
goals. The water quality standards which were adopted under
the prior versions of the Federal Water Pollution Control
Act are continued in effect and can be updated by states.
New standards are to be established where they were not pre-
viously adopted by the states. If water quality standards
-------
cannot be met by the 1977 effluent limitations, then more
stringent limitations must be adopted by that date. Thus the
effect of the Amendments is to require the achievement of
best practicable technology and secondary treatment by 1977,
plus further effluent limitations in those cases where water
quality standards are endangered.
For this study the 1977 regulations concerning effluent
limitations and water quality standards are assumed to be a
requirement all polluters must meet. Thus, industries are
constrained to achieve best practicable treatment levels (as
defined by EPA) by 1977; similarly municipalities must achieve
secondary treatment levels by that date and water quality
standards must be met.
The evaluation in this study of the marketable effluent
permit system is made on the basis of economic efficiency,
administrative and enforcement requirements, equity, and
legal and political feasibility. The MEP system is measured
against these criteria and is compared with other control al-
ternatives to determine its relative strengths and weaknesses
for use as a tool to implement the 1972 Amendments.
Criteria for Evaluation of the MEP System
As stated above, the purpose of this study is to evaluate
the effectiveness of the marketable effluent permit approach
in achieving the goals of the 1972 Amendments. "Effectiveness"
-------
refers to the relative efficiency, the ease of administration
and enforcement, the degree of equity, and the legal and polit-
ical feasibility of the control method.
The efficiency of the MEP method is measured in terms of
direct resource costs of waste treatment that are expended to
attain the goals of the Amendments. Under these terms of
reference, the most efficient method to achieve a stated goal,
for example, a given ambient water quality standard, is to
allocate treatment requirements among dischargers in a manner
that minimizes the total resource costs of pollution control.
This is the least cost configuration of waste treatment, and
is used here as a standard against which to measure the effi-
ciency of different control methods.
The administrative and enforcement properties of the MBP
system are not as easily evaluated since there is no standard
measure of performance. The best that we can do is to attempt
to outline the administrative and enforcement requirements of
the system's operation. Those requirements can then be com-
pared with the corresponding requirements of other methods of
water pollution control.
Equity is perhaps the most difficult of all of the cri-
teria to define. One important factor is the equal treatment
of equals—uniform regulations imposed on dischargers in sim-
ilar situations. The difficulties, however, are in defining
-------
what is meant by "similar situations" and in comparing dis-
chargers who are not in similar situations. The measures that
we focus on in this report are the per capita costs for munic-
ipalities and the distribution of costs for different indus-
tries. This report draws conclusions based on these measures
as well as on the subjective evaluation of the extent to which
the control system presents the appearance of equity to
participants.
The legal feasibility of the control method refers to
matters regarding its constitutionality, the extent to which
changes in legislation are required, and the legal difficulties
likely to be encountered in implementing the control method.
The political feasibility of the control system has to do with
the likelihood of its being acceptable to the general public,
the administrative and legislative bodies involved in its im-
plementation, and the dischargers who will be under the regu-
lations of the system. This is related to both the equity and
the legal feasibility of the system and is perhaps the most
subjective of the criteria that are used in this study.
Organization of the Report
The present introductory section of this report, Section
1, is followed by the detailed examination of the MEP system
in Sections 2 through 7. In Section 8 the results from ear-
lier sections are evaluated, the MEP system is compared with
-------
other control alternatives (in particular, the effluent charge
system and the NPDES), and some aspects of implementation are
discussed.
Section 2, which follows below, is a detailed look at
the variants of the MEP system. For example, the question of
what pollutants to include under this control system is dis-
cussed and tentative conclusions are presented. Wherever
possible, logical choices among variants of the system are
made in Section 2. In many cases the viability of the MEP
system does not rise or fall on the basis of the resolution
of such questions; nevertheless, their tentative resolution
allows the discussion in the following parts of the report to
be better focused.
In Section 3 the theory of the MEP system is discussed.
The material in that section is based on the standard theorems
of microeconomics theory. In addition, theoretical work on
externalities and on systems of emission rights is reviewed.
Section 4 is drawn from the theory of industrial organi-
zation. The concepts of workable competition are applied to
the MEP system to attempt to discover potential problems of
the effluent permit market.
Markets and auctions analogous to the MEP system are de-
scribed in Section 5. The Treasury bill market, the offshore
oil leasing auction, and the market for taxi medallions are
-------
examined to find information relevant to the workings of the
MEP system.
In Section 6 the results of the Mohawk River effluent
permit system simulation are presented and analyzed. Vari-
ants of the MEP system were analyzed with a computer simula-
tion model. The data base used for the model is the upper
Mohawk River basin. Responses of the polluters in that basin
to a MEP system are estimated with the computer simulation
model.
The legal and administrative aspects of the MEP system
are treated in Section 7. The discussion there includes con-
stitutional, tax, and legislative issues, as well as related
administrative matters. The costs of administering the MEP
system are compared in Section 7 to those of other control
systems.
-------
Section 2
The Marketable Effluent Permit System
In the marketable effluent permit system a regulatory
authority issues effluent permits authorizing the discharge
of certain pollutants in amounts that depend on the receiving
waterway and the desired stringency of pollution control.
The key to the system is reliance on a market-related alloca-
tion method. As we elaborate below, several variants of the
marketable effluent permit system are possible; for one to
which we give prime consideration, permits are distributed
to dischargers through a combination direct allocation system
and a Dutch auction system. Subsequent to the initial dis-
tribution, holders of permits may buy and sell them through
a regulated market. Permits can be bought and sold by indus-
tries, municipalities, and anyone else with an interest in
obtaining the discharge rights inherent in the possession of
the effluent permit.
An example is helpful in order to establish the nature
of this control system. Suppose that there are fifteen dif-
ferent dischargers located along a given waterway. Under the
MEP system, the regulatory authority determines the number of
effluent permits to issue as a function of the nature of the
waterway and the water quality goals. If the goal is to
achieve a given level of dissolved oxygen concentration then
10
-------
the permits are designed to meet that requirement. Each per-
mit would authorize the holder to discharge one pound per day
of BOD into the waterway, and the number of such permits
issued by the authority would depend on the desired water
quality. To account for the differential impact of different
polluters on the water quality, permits would be worth dif-
ferent amounts (of waste discharges) to different polluters.
The unique characteristic of the marketable effluent sys-
tem is that the ultimate allocation of the permits depends on
a market type transaction. For example, the permits may be
originally sold to bidders in a Dutch auction (described be-
low) or in an auction in which permits are distributed to the
highest bidders until none remain. No matter what system is
employed for the initial distribution of the permits, there
still remains the possibility of employing a market for their
subsequent allocation among participants in the system. A
market, similar to markets for stocks and bonds, can be estab-
lished in which participants can buy and sell them. Thus an
industrial firm desiring to enter a river basin region would
use the market to purchase the effluent permits necessary for
the operation of its plant. The entering firm would be re-
quired to bid the price of the permits up enough to induce
one or more of the permit holders to sell the requisite number
of effluent permits.
11
-------
The efficiency properties of markets are well-known.
The use of a market for effluent permits presents each pol-
luter with an option: reduce waste discharges or buy permits
authorizing those discharges. The polluter is continually
faced with the opportunity to increase waste discharges by
purchasing additional permits or to reduce discharges by sell-
ing the excess permits. Thus, the price of the permit in
the market creates an incentive for the polluter, just as the
effluent charge does. A cost-minimizing polluter will treat
wastes (and sell excess permits) up to the point at which the
marginal cost of waste discharge reductions equals the price
of a permit.
This has two desirable effects. The first is that each
polluter has a continuing incentive to seek ways further to
reduce discharges. The second is that the market assures that
the marginal costs of waste control are the same for different
dischargers. If the costs to each discharger of eliminating
the last unit of wastes are the same, then there are no oppor-
tunities to achieve the same total (river basin effluent) dis-
charge reduction at a lower total cost.
The MEP system has other desirable attributes including
(1) indicator properties, (2) the ability to deal with the
growth and entry of polluters, (3) adjustment simplicity,
(4) effectiveness, and (5) equity properties. These can be
quickly summarized.
12
-------
The indicator properties of the MEP system arise as in
any market: the price equals the marginal value of the com-
modity to the market participants. Thus, the price of the
permit is an indicator of the marginal value of the permit to
polluters; consequently, for cost-minimizing polluters, the
price of a permit gives the marginal cost of reducing waste
discharges.
The growth and entry of polluters is handled naturally
and effectively in the MEP system. Increasing waste discharges,
through either entry or growth, is allowed only upon the ac-
quisition of effluent permits. Thus, the polluter (or aspir-
ing polluter) must enter the market for effluent permits and
induce other dischargers to relinquish some permits. This
assures that the total discharges into the basin remain the
same and, further, that the entering or growing polluter is
forced to take account of the marginal costs of waste treat-
ment that growth imposes on the river basin system.
As with the effluent charge, an adjustment in the control
level for the river basin can be made simply and impersonally
with the MEP system. When permits expire, the regulatory
authority can reduce the total amount of outstanding permits
by issuing fewer. More importantly, the regulatory authority
has the opportunity to buy permits on the open market and to
retire them. Neither of these procedures is excessively com-
plicated administratively and either can be accomplished
13
-------
impersonally without devising different rules and procedures
for different polluters.
By providing a continuing incentive for waste reduction,
the effluent permit promises to speed waste discharge reduc-
tions. Additionally, the market provides an orderly and im-
personal way in which discharge privileges are allocated.
Since the alteration of the pattern of discharge reductions
takes place through the actions of the market rather than
through administrative procedures, there are fewer opportuni-
ties for polluters to postpone compliance.
Finally, the MEP system has two desirable equity charac-
teristics. First, the allocation of permits and discharge
privileges is made through the market. Each polluter must
pay the same amount—the market price—for increasing waste
discharges. Thus, in a very basic sense, equals are treated
equally. Second, the MEP system provides a good deal of flex-
ibility with regard to the distribution of the costs of pol-
lution control. By subsidizing the purchase of permits (in a
way that, as is discussed later, enhances the efficiency prop-
erties of the market) by municipalities, the costs to cities
can be kept down. In addition, the initial allocation of dis-
charge permits need not be made via the market. The MEP sys-
tem can function effectively even if permits are initially
given to polluters. This provides the regulatory authority a
means of influencing the distribution of costs among polluters.
14
-------
Many different variants of the MEP system are possible.
The complete specification of a MEP system would include the
following elements:
1. the method of initial distribution of the permits;
2. the pollutants or ambient conditions covered by the
permits (permits could be issued with reference to
particular pollutants or with reference to particu-
lar ambient conditions);
3. the term and amount of the permits, i.e., the spec-
ification of the time period during which they are
valid and the rules for the issuance of additional
permits or the retirement of extant ones;
4. the eligibility requirements for holders of permits
and the kinds of pollution sources to be included;
5. the relation of the pollution controls to hydrologic
and other seasonal variations in water conditions;
6. the trading rules and procedures of the market;
7. the methods of monitoring discharges, enforcing com-
pliance to the discharge limitations, and enforcing
compliance to the other rules of the market;
8. the relation of the permits to the NPDES and to the
federal and state grant programs for wastewater
treatment;
9. the choice of basins to be included on the system
and the definition of the physical boundaries of the
water basin;
10. the use of monies collected and the source of money
for the administration of the system; and
11. the administrative machinery for the MEP system.
These aspects of the MEP system are discussed below.
15
-------
The Method of Initial Distribution
The way in which the effluent permits are initially dis-
tributed is of crucial importance and, in fact, is the very
crux of some MEP systems. The option is either to sell the
permits or to give them away. If they are sold, the question
remains how the sale is effected; if they are given away, the
question is to whom and in what amounts.
Effluent permit systems can be categorized in accordance
with the following matrix:
Sale
Direct Allocation
I
III
II
IV
Under our broad definition of the MEP system, regulatory meth-
ods of types I, II, and III are all marketable effluent permit
systems. In each of these types of systems effluent permits
are distributed and, in types I and III, are subsequently
traded among participants using a market (an auction, trading
procedure, or the like). Effluent permit systems of type IV
are not MEP systems; NPDES is a type IV system.
Under type III effluent permit systems, the initial allo-
cation of permits is determined on the basis of criteria other
than market bids. One possible variant of this approach is to
give permits to each discharger for a given proportion of the
16
-------
discharger's current waste load. For example, if the total
waste load for the waterway is initially 200 units per day,
and the authority determines that this load should be reduced
to 100 units per day, then each of the existing dischargers
might be issued permits authorizing discharges equal to one-
half of their current loads. If subsequent trading of the
permits is allowed through a market system, this control sys-
tem will share most of the desirable efficiency properties
of the MEP system. In that case as Montgomery shows, the
only effect of the direct allocation of effluent permits is
to affect the allocation of costs among different dischargers.
In the type I and type II systems, the initial distribu-
tion of the effluent permits is through a sale or an auction.
The two procedures that we consider here are the so-called
Dutch auction system and an English auction system of the
sort used by the government to sell Treasury bills. In both
auction systems the regulatory authority first publicizes the
characteristics of the permits—their term, the amount of
pollution discharges authorized, and any other relevant facts.
In the Dutch auction system the authority announces a rela-
tively high price and invites orders for permits at that price.
If the number of the orders is insufficient to absorb the en-
tire issue, all orders are voided, a lower price is announced,
and the process begins again from scratch. Ultimately, a
price is reached at which all of the available permits are sold,
17
-------
In the Dutch auction system the orders for permits sub-
mitted by individuals at the announced price are binding on
those individuals; they are obligated to receive the number
of permits they apply for and to pay the announced price.
In contrast, the government has the right to cancel the of-
fering price and void the extant orders if the total number
of permits ordered falls short of the total number offered
by the authority. In this case the authority lowers the
price and repeats the auction procedure. The purchasers of
the permits can have no complaints if this occurs. It is as
though they are told that (1) their present order for permits
will be filled at a price lower than the one they expected,
and (2) if they want to order additional permits they may do
so.
It is possible to operate the Dutch auction in a one-
step procedure by asking for a schedule of orders rather than
for one order at a time. Thus, for example, a polluter's
order for permits received by the authority would state the
total amount of permits that the individual wished to purchase
at each of several different prices. Table 2-1 gives such a
schedule. This particular order for permits would obligate
the buyer to purchase 15,000 permits if the price is $10,
20,000 permits if the price is $8, and so on. Using this de-
mand schedule along with all of the others submitted by poten-
tial buyers, the authority can determine the price at which
the market clears, i.e., the price at which the prespecified
18
-------
Table 2-1
Hypothetical Order for Permits for
a Dutch Auction
Price of Permits No. of Permits Ordered
$ 2 50,000
$ 4 34,000
$ 6 26,000
$ 8 20,000
$10 15,000
$12 13,000
19
-------
total number of permits can be sold. The permits are issued
and distributed according to that price.
A second possibility for an auction market is the English
auction similar to the one operated every Monday for the sale
of United States Treasury bills. Under this system, blocks of
permits are auctioned off one at a time until the total supply
of permits is exhausted. For example, if 100,000 permits are
to be sold, they could be sold in blocks of 100 at successively
lower prices until all 100,000 are sold. This method appears
to be inferior to the Dutch auction for at least two reasons.
First, under the Dutch auction, each of the participants
in the market is assured of obtaining all of the permits or-
dered at the price that is finally established in the market.
In contrast, there may be frustrated orders in the English-
type auction. This can encourage the submission of bids that
are based on gaming approaches to the auction, rather than bids
that represent the true value of the permit to the polluter.
For this reason the English auction may lead to a less effi-
cient allocation of waste treatment than the Dutch auction.
Second, in the Dutch auction every bidder obtains the
permits at the same price. This has the appearance of equity.
In contrast, the English auction system discriminates among
different buyers. Different buyers pay different amounts for
the permits in accordance with their bids.
20
-------
One of the supposed advantages of the English-type auc-
tion system is that the revenues from the sale of the permits
are higher than under the Dutch system. This, however, may not
be the case. Due to the expectations and bidding behavior of
different market participants, revenues under the English sys-
tem may actually turn out to be lower. This is discussed
further in Section 5.
In the event that the regulatory authority wants to issue
or retire some of the effluent permits, or in the case where a
new or existing discharger makes increased demand for waste
load discharges, a type I or III system is vastly superior to
a type II MEP system. In both the type I and type III systems,
there is a market for buying and selling permits that is main-
tained over time and that allows adjustments to changes in the
river basin system or in the stringency of regulatory controls.
The type II system performs the initial allocation chore among
dischargers in an efficient manner, but it lacks the highly de-
sirable dynamic qualities of the type I or type III system.
Suppose, for example, that a new industrial firm desires
to enter the riverway. Under the type II MEP the authority
must set aside some assimilative capacity for such a contingency,
If this assimilative capacity is then sold to the entering firm,
there is no assurance that the efficiency properties of the
system are maintained. In contrast, in the type I and type III
systems, the entering or growing discharger is required to
21
-------
participate in the market for effluent permits in order to in-
crease waste discharges. This assures that the allocation of
waste treatment chores among polluters is maintained in a rea-
sonably efficient configuration. Provision for the automatic
handling of the growth of the river basin is one of the most
appealing and outstanding characteristics of the MEP system and
is a compelling factor in the rejection of the type II system
in favor of types I or III.
Pollutants Included in the MEP System
Several factors are relevant to the choice of pollutants
to be managed by the MEP system. Advantages of the MEP system
include its efficiency and dynamic properties. Such advantages
are significant only if there are substantial amounts of money
involved in the control of the pollutant. The likelihood of
maintaining an efficient market is greater if the market is
large in terms of both numbers of players and money. An ac-
tive and on-going market with ample participants is necessary
in order to assure that a buyer or a seller can complete a
trade without radically altering the market price. This con-
dition, which assures that the market price is meaningful and
that the market is effective, is more likely if the number of
market players is large. This suggests that the marketable
effluent permit system will work best in instances where
(1) there are many polluters and (2) significant expenditures
are anticipated for the control of the pollutant. Additionally
22
-------
there is little sense in operating a market if the object is
the immediate and complete prohibition of the discharge of the
pollutant or if the amounts of the "commodity" traded in the
market cannot be easily measured. These considerations sug-
gest that (3) the pollutant cannot be one that is completely
prohibited and (4) the pollutant, its amount and its source
must be easily identifiable.
Two measures of pollution that meet these criteria are
biochemical oxygen demand (BOD) and biomass potential (BP).
The concept of biochemical oxygen demand and the oxygen-sag
phenomenon are well known and need not be discussed here. For
cases in which dissolved oxygen is the ambient measure of water
quality, BOD is perhaps the appropriate measure of waste input
to employ. In contrast, the concept of biomass potential used
here is not well known. It has only recently been defined and
elaborated in "Effluent Charges: Is the Price Right?", a re-
port prepared by Meta Systems Inc for the Environmental Protec-
tion Agency. The argument for and details of the use of BP as
the measure of pollution are presented in that report. Here
we present a brief summary of the definition and use of BP as
a measure of pollution.
Most existing biological quality criteria were designed
originally with reference to water potability. They relate to
the control of waterborne disease and of tastes and colors in
drinking water. The intent of BP is to provide a surrogate
23
-------
for needed biological and ecological parameters to measure
water quality for recreation and aesthetic purposes. A use-
ful quantitative measure of stream loading from municipal and
industrial sources would be a parameter that indicates the ex-
tent to which substances in waste water distort the biological
activity of streams beyond natural levels. Excess productivity
can be correlated with the increment of biomass above that of
the natural aquatic ecosystem.
The biomass or decomposition potential of a wastewater
effluent, measured in either concentration units, milligrams
per liter, or in units of material flux, pounds per day, may
be quantified as follows:
aBOD5 + 3N + yP.
Here BOD5 is the five-day BOD measured under standard labora-
tory conditons; N is total (organic or nitrate) nitrogen; and
P represents biologically available phosphorus. The coeffi-
cients a, 3 and y reflect the relative contributions of each
constituent. While further research is needed to delineate
these parameters precisely for many streams and lakes they may
for practical purposes be taken as simple fixed constants. In
the numerical computations of this study, biomass potential
has been defined with a = 1.47, 3 = 4.57, and y = 30.
The impairment of a stream, pond, or lake by the discharge
of degradable organics and nutrients can be conceived as a
24
-------
function of the concentration of added biomass potential, the
mean residence time of nutrients, and the stream geometry which
affects the rate of recycling of nutrient elements. Unlike
the oxygen-sag formulation for determining stream assimilative
capacity for aerobic stabilization, the relation determining
the effect of BP on a waterway is essentially distance inde-
pendent. That is, the stream impairment from BP is largely
independent of the point of outfall of the discharge within a
given segment. Consequently, the transfer coefficients that
relate the amounts of discharges to their effects on a given
segment of a waterway are essentially constant among different
2
polluters if BP is taken as the parameter of pollution.
The marketable effluent permits can be geared either to
the amount of the pollutant entering the waterway without re-
gard to any differences in the effects on ambient quality
among dischargers, or the system can be designed to maintain
particular ambient conditions. (In some cases—notably when
BP is used as the measure of pollution—these two approaches
are equivalent.) To illustrate the latter approach, assume
that minimum standards for dissolved oxygen concentration have
been set for each section of a tidal estuary. Then in order
to maintain the specified quality profile of the estuary, the
regulatory authority issues permits that specify the amount
that the holder is authorized to discharge into the waterway.
The holder of the permit is given the option of discharging
25
-------
into any section of the estuary, but the amount of the allow-
able discharge is dependent on the effect of the discharge on
water quality and thus on the point at which the discharge is
made. For example, if the effects of discharges into section
1 are twice as deleterious as discharges into section 2, then
a permit might give the polluter the option of discharging
1 Ib/day of BOD into section 1 or, alternatively, 2 Ib/day of
BOD into section 2.
This procedure can be described more completely with an-
other example. Using the oxygen-sag formulation, the regula-
tory authority estimates a set of transfer coefficients d..
which indicate the relative effects of waste discharges at
different points on the waterway. The coefficient d. . indi-
cates the effect on the quality of section j of a one-unit
discharge into section i. In the case of BOD, d.. is the re-
duction in the dissolved oxygen concentration of section j
which would result from a 1 Ib/day increase in BOD discharges
into section i. Now, if the goal is to maintain a specified
water quality profile, then the authority must recognize that
the effects of discharges on water quality are different for
different discharge locations and formulate the effluent per-
mits accordingly.
Suppose that there is only one critical section of the
waterway, i.e., one section in which the quality standard is
endangered. Growing and entering polluters are most likely
26
-------
to push the dissolved oxygen level in the critical section be-
low the established standard. Consequently, the trading of
permits among sections must be related to the critical reach.
Suppose, for example, that waste discharges into section 2 have
twice the impact on stream quality in the critical section as
waste discharges into section 8. Under this assumption if
section 5 is the critical section, then d25 would be twice as
large as dg5. To be more specific, suppose d25 = 0.0002 ppm/
Ib-per-day and dg5 = 0.0001 ppm/lb-per-day. Thus, for every
t
pound per day of discharges into section 2 the dissolved oxygen
concentration falls 0.0002 ppm, and every pound per day dis-
charged into section 8 lowers the dissolved oxygen concentra-
tion by 0.0001 ppm.
In the above example an exchange of discharge rights be-
tween sections 2 and 8 would alter the quality of the critical
section 5. If one pound per day of waste discharges is trans-
ferred from section 8 to section 2, the increased discharge
rate in section 2 will lower the section 5 DO level by 0.0002
ppm while the decreased discharge rate in section 8 will in-
crease the section 5 DO level by 0.0001 ppm. The net effect
is thus a 0.0001 ppm decrease in the DO concentration of the
critical section. To avoid lowering the quality of the criti-
cal section, one-to-one trades of discharge rights must not be
allowed. In this example an increase of one pound per day in
the section 2 discharge rate must be accompanied by a decrease
27
-------
of two pounds per day in the section 8 discharge rate. The
net effect on the DO level of section 5 is then nil.
A reformulation of the permit system can solve the problem
of the differential effects on the critical section. Each per-
mit can be designed to authorize different discharge rates for
different discharge locations. In the above example, a permit
would carry with it the right to discharge either one pound
per day into section 2 or two pounds per day into section 8.
Thus the transfer of the permit from section 8 to section 2
would not lower stream quality in section 5.
The most complicated case is one in which the permits are
geared to the maintenance of ambient water quality, the trans-
fer coefficients are not equal to one another, and there exists
more than one critical section of the waterway. In this situa-
tion, the trade or sale of permits must account for more than
one quality constraint. Such a case may arise if, as in
Figure 2-1, the quality standards are different in different
sections of the waterway. In such a system there exist market
prices and permit supplies such that the different quality
standards are met and the least cost situation is attained
(see Section 3 of this report). For the situation of multiple
quality constraints and multiple transfer coefficients, the
permit system design is complicated. A system must be estab-
lished to ensure that all trades and exchanges of permits main-
tain the water quality level at all critical sections of the
28
-------
Figure 2-1
Quality Standards and Ambient Quality
for a Hypothetical River Basin
7
6
Is
Q.
QUALITY
STANDARDS
O
f 4
3
2
1
1
1
1
567
RIVER MILE
29
-------
waterway. More than one quality constraint must sometimes be
considered in setting the allowable trading ratios among dis-
chargers.
Thus, gearing the MEP system to ambient standards results
in a potentially more complicated system than if the goal is
simply the control of a given amount of total discharges. In
the presence of multiple trading ratio constraints the opera-
tion of the market by the regulatory authority in a fashion
that would maintain stream quality standards may be so com-
plicated as to obscure control from public scrutiny. This
is not an insurmountable difficulty; indeed, it is possible
to understand and to operate the system effectively in spite
of multiple quality constraints and differential effects on
water quality. However, the fact remains that the simpler the
system, the better it is administratively as well as politically.
There are, however, other compelling arguments based on
the intent and substance of the 1972 Amendments for the use of
a control system geared only to the control of discharges and
largely independent of the details of ambient water quality
conditions. As is stated above in connection with the defini-
tion of biomass potential, new biological and ecological
parameters are needed to measure water quality for recreation
and aesthetic purposes. These parameters must, by the nature
of the water quality goals, relate more to the total effects
of the pollutants on the waterway system than to effects on
30
-------
specific quality parameters. Additionally, the emphasis of
the 1972 Amendments is on effluent limitations, rather than
ambient water quality. The goals of the bill clearly focus
on the reduction and eventual elimination of discharges.
Within this context, it makes sense to design a control
system that is centered on the reduction of discharges. This
does not preclude the use of a MEP system prior to 1977, the
date for which the water quality standards apply. Indeed, the
use of such a control system can assist in the attainment of
the quality goals. However, the system can best serve the
attainment of the longer term goal of discharge elimination
and should be designed with that in mind.
In the case of biomass potential the transfer coefficients
are equal: d25 is the same as dg5. Thus the trading ratios
among discharge locations are unity, and a market geared to
the establishment of some specified level of ambient water
quality is equivalent to a market in (effluent) BP units.
Since each BP unit has the same effect on water quality, each
permit can specify an allowable number of BP units without
reference to the location of the discharge. This makes for a
simpler market, and is an adventitious effect of the use of
BP as the measure of pollution.
In sum, the MEP system is best confined to pollutants
meeting the criteria presented above—BOD and BP are two prime
31
-------
candidates—and is best used without reference to different
trading ratios. Thus the trading ratios among dischargers
are unity and discharges in one end of the waterway are con-
sidered equivalent to discharges in the other end: permits
trade on a one-to-one basis. In those river basins in which
this approach endangers water quality standards, fewer total
permits are issued.
It should be noted that although it is theoretically pos-
sible to operate different MEP systems for different pollutants
within a given water basin, BP and BOD cannot be used simul-
taneously because BP relies on a measure of BOD. It would,
however, be possible to establish separate markets in the same
waterway for two pollutants such as BOD and heat discharges.
The Term of Permits
Subsequent to the original auction of permits the author-
ity may want to increase or decrease the total number of per-
mits in existence. To do so in an ad hoc manner would disrupt
the functioning of the market and trust in the market as a
mechanism for the allocation of waste discharges. Consequently,
upon initial issuance of the permits provision should be made
for limiting their term. If the term of the permits is limited,
then a reduction in the number of outstanding permits can be
made by reissuing fewer than expire. Issuance of new or addi-
tional permits can be easily accomplished through their sale
in the market.
32
-------
Limiting the term of the permits is desirable for other
reasons, in particular to guard against the establishment of a
permanent property right in polluting and to help assure that
the MEP market functions relatively smoothly and continuously.
Also, if initially the permit terms are staggered so that some
of the permits expire each year, then there is the opportunity
each year to reduce discharges, improve water quality and work
toward the goals of the 1972 Amendments by reducing the number
of outstanding permits. However, as is observed in Section 6,
the number of outstanding permits can become politically dif-
ficult to alter. For this reason the intention to remove per-
mits from circulation should be announced at the outset of the
MEP system, and to the extent possible estimates of the sched-
ule of permit retirement should be given. An alternative that
is open to the regulatory authority in a type I or III system
is to remove permits from circulation by purchasing them on
the open market. This costs the authority money, but preserves
the desirable properties of and confidence in the MEP system.
In a staggered-term MEP system, each permit authorizes a
specified rate of discharge, say one Ib/day of BOD, for a pre-
determined length of time. After the expiration of the permit,
the holder must (assuming the permit is being used by a waste
discharger) purchase another permit or restrict waste dis-
charges. For the MEP systems we examine in Section 7 there
are five different term permits. In one of those systems,
33
-------
permits are issued with one, two, three, four, and five year
terms. Subsequently, any new permits would be issued with
five-year terms. Thus if one-fifth of the permits expire
after one year, the regulatory agency might choose to replace
them through an auction with an equal number of five-year
permits.
Staggering the permits is advisable for three primary
reasons. The first is that it avoids a serious, major dis-
ruption in the market's functioning that would occur if all
permits were to expire contemporaneously. The second reason
is that a turnover of permits helps to assure that there is
a market, i.e., that purchases and sales occur reasonably
often. The third reason for staggering permit terms is men-
tioned above: it allows the regulatory authority to adjust
in a continuous manner the number of outstanding permits. As
permits expire, fewer can be issued in accordance with the
goals of the 1972 Amendments. This allows a gradual attainment
of those goals.
In all of the effluent permit systems considered here,
the number of permits to be issued by the authority is fixed
in accordance with the characteristics of the individual
river basin system. Thus, there are a fixed number of permits
to be allocated among the participants of the system. This
is in contrast to systems in which the price of the permits
or the information obtained in an auction is used to help
34
-------
determine the optimal number of permits to be issued or sold.
Thus the MEP system analyzed here is based on effluent and/or
ambient standards, rather than on a marginal damage function.
This approach recognizes the fact that measures of damages are
not available and, further, that the present legislation is
based on standards.
Eligibility Requirements for Permit Holders
There are two questions concerning participation in a MEP
system: first, who is required to hold permits, and, second,
who is allowed to participate in the market? Stated differ-
ently, which classes of dischargers are to be regulated using
the MEP system and which sets of individuals will be allowed
to participate in the effluent permit market? The latter
question arises because speculators and environmentalists may
want to purchase permits.
In determining which sources should be controlled with
the MEP system, consideration must be given to the nature of
the discharge as well as the nature of the discharger. The
types of pollutants are discussed in the above section. There
is also the question of whether non-point pollution sources
can be included in a MEP system. (A non-point source is one
where the discharge into the waterway is distributed over a
wide area rather than being.collected and discharged at one
location. An example is the runoff from agricultural fields.)
35
-------
There are at least two arguments for excluding non-point
sources from the MEP system. First, it is difficult accurately
to identify and measure the amounts of wastes flowing into a
waterway from a non-point source. Consequently, it can be
argued that regulations should be in the form of specifying,
for example, better agricultural practices rather than impos-
ing effluent limitations of the sort implicit in a MEP system.
Second, the control of non-point sources is difficult and at-
taining particular performance standards, say in terms of
Ib/day of BOD, is not possible.
Neither argument is compelling. It is in fact possible
to estimate the effects of different control or process alter-
natives for the control of non-point sources. While the un-
certainty in these estimates is likely to be greater than for
the control of point sources, there is little rationale for
not encouraging the development of more effective technology
and measurement techniques. This development must of neces-
sity occur no matter what the choice of control method.
There is the additional question of whether municipal
dischargers should be required to participate in the MEP sys-
tem. An alternative is to impose specific municipal treat-
ment requirements with performance standards. We believe,
however, that the MEP system should include municipal dis-
chargers. There are efficiency gains to be made by including
36
-------
the municipal systems; uniform performance standards do not
efficiently distribute treatment costs among dischargers.
The assumption that municipal dischargers act within the
marketable effluent permit system as cost minimizers can be
questioned. Municipalities are not organized as business firms,
and decisions are often made on bureaucratic rather than eco-
nomic grounds. However, unlike some public services, waste
treatment is measurable and well defined. It lends itself to
control and measurement better than police protection, educa-
tion, and many other public services. At present many munic-
ipal plants are operated ineffectively because cities have
little or no incentive to maximize the effectiveness of their
pollution control facilities. The MEP system provides an
incentive.
As is shown below, there need be limited additional finan-
cial burden on municipalities from a well-designed MEP system.
Additionally, a permit system can be an added incentive for
equitable cost sharing among the users of a municipal waste
treatment system.
The second issue regarding participation in the MEP sys-
tem is the question of who is to be eligible to buy and sell
permits. Potential permit holders include the following.
First, there are the dischargers required to hold the permits
in order to operate their facilities. Second, environmentalists
37
-------
and conservationists may be interested in purchasing permits
in order to prevent the dumping of wastes into the waterway.
Third, speculators may be interested in buying and selling
permits in order to make money on the transactions. These
types of participants are not mutually exclusive. For example,
a discharger may be in a good position to speculate on the
value of the permits.
Under a type II MEP system the initial distribution of
the permits is accomplished through a market-type device, such
as an auction. Trading of the permits subsequent to the first
distribution is not allowed. This type of MEP system pre-
cludes speculative activity, since the purchase and sale of
permits is not allowed. For this type of MEP system there are
compelling arguments not to limit market participation to dis-
chargers. First, there is little guarantee that the dischargers
will at all times use all of the permits that they hold. They
may hold more than they need for reasons of advance planning
or for speculative reasons having to do with potential growth
of their operations. It would seem perverse to require that
the dischargers use all of the permits they purchase, i.e.,
to require that they pollute. On the other hand, it would be
discriminatory to allow speculative activities by potential
producers of waste (who nay not be using their effluent per-
mits) , yet prohibit others from speculating in the market.
38
-------
Second, it is important to have a large number of market
participants. Participation in the market by a diverse set of
individuals places a check on dischargers who may try to ma-
nipulate the market for their own benefit. Speculative activ-
ity can help to assure that the market works reasonably well
and that collusive activities by dischargers or other attempts
to manipulate the market do not succeed.
The presence of speculative activity can help reduce
problems of market manipulation. If speculators are in the
market, a large discharger is unable to offer a particular
low bid in the hopes of keeping the price of the permits down.
To do so would risk losing the permits to a speculator who
could then sell them to dischargers for a premium. Since the
presence of speculative activity can help the market to oper-
ate efficiently, a type II MEP system may be less effective
than a type I or a type III system. It is well known, how-
ever, that speculative activity can be detrimental in some
cases. Panic buying or selling by speculators can disrupt a
market, and speculators with large amounts of capital can
sometimes manipulate markets. These possibilities must be
weighed against the potential beneficial effects of specula-
tive activity.
Hydrologic and Other Seasonal Variations
Changes in the flow of the receiving waters or in their
temperature can alter significantly the assimilative capacity
39
-------
of the waterway. If the goal of a control system is to control
the quality of the water, then these variations should be ac-
counted for. They provide opportunities for a temporal allo-
cation of the waste treatment capabilities of the receiving
waters. It is possible to structure a permit program to take
advantage of this fact. The permits can be designed on a sea-
sonal basis by providing bonus discharges during high flow
months or by varying authorized discharges in a prespecified
manner with the conditions of the receiving water.
In spite of the possibility of exploiting the variation
in stream conditions, we suggest a system of permits confer-
ring unchanging discharge privileges with the number of permits
determined in accordance with quality standards and based on
the expectation of an extreme hydrological condition in the
low flow season. A permit system structured to allow daily
or weekly discharge variations in accordance with daily or
weekly streamflow changes would entail prohibitive adminis-
trative requirements. A permit system could, however, be
structured in accordance with the expected seasonal hydro-
logic changes, with adjustments in the discharge privileges
keyed to some seasonal multiple of the expectation of an
extreme hydrological condition. A system based on sea-
sonal changes would introduce additional monitoring re-
quirements and would make the permits more difficult for
dischargers to evaluate. Our approach in this analysis
has been based on a rationale that if a permit system
40
-------
is to be considered, it should be a simple one in order to
promote the smooth operation of the market and to avoid admin-
istrative problems. Hence, this report does not examine sea-
sonally variant permit schedules. It might also be argued
that since the goal of the 1972 Amendments is to reduce the
long-term amounts of waste load on waterways, control methods
designed to even out the quality of water throughout the year
are not in the spirit of this legislation.
The Trading Rules and Procedures for the Market
In the operation of an auction for permits or of a market
for the purchase and sale of permits, certain ends are desired.
In particular, the rationale for having such a market is that
it can provide an efficient, orderly method for the allocation
of waste treatment among dischargers. As with any market, how-
ever, certain things can inhibit its correct functioning.
Market imperfections may prevent the MEP system from exhibit-
ing the desirable efficiency properties theoretically inherent
in it. Rules and regulations on the conduct of individuals can
help to avoid market problems. Such rules can include limits
on prices, limits on price movements, or limitations on the
permit holdings of any one market participant.
The rationale behind such rules is to prevent market panics
and market manipulation. A market panic might occur if every-
one predicted a significant increase in the price of the
41
-------
marketable effluent permit. In their effort to buy permits
(either for speculative purposes or in anticipation of a subse-
quent need for them) they force the price up and the predic-
tion of an increase in price becomes a self-fulfilling prophecy.
A daily limit on the amount by which the price can increase or
decrease can de-fuse such a panic by allowing time for market
participants to reassess the supply and demand situation. They
can then respond to those factors rather than to the psychology
of the market. Similarly, placing a limit on the number of
permits that one participant can control helps to avoid the
domination and manipulation of the market by large interests.
The Choice and Definition of Basins
The choice and definition of river basins suitable for
a MEP system is fraught with subjective judgments. The best
areas for this system of control—the ones in which the mar-
ket will function best—are regions with many polluters and a
large total discharge rate. This enhances the probability
that the system will operate as a competitive market, rather
than being dominated by one or a few dischargers.
Financial Aspects of the MEP System
It is expected that the regulatory authority will collect
money from both the auction of permits and the administration
of fines. There are several natural and immediate claims on
these funds. The administration of the market, monitoring
42
-------
and surveillance procedures, and the collection and evaluation
of data pertinent to the operation of the MEP system all re-
quire funds. Excess revenues that are collected should revert
to the state treasury, perhaps for use in water quality control.
Monitoring and Enforcement
The monitoring of discharges and the enforcement of ef-
fluent limitations are necessary elements of the MEP system.
It is necessary to determine whether dischargers are in com-
pliance by comparing the amounts of discharges with the amounts
specified by the permits that they hold. There must be suit-
able penalties for exceeding the allowable discharge rates and
mechanisms for assessing and collecting those penalties.
The MEP system thus shares the enforcement and monitoring
characteristics and problems of the NPDES system. There is an
additional aspect to the MEP system: the permissible level of
discharges can vary from time to time if permits are traded
among dischargers. This, however, is merely an accounting
problem and will in all likelihood not affect substantially
the monitoring and enforcement methods of the system.
Monitoring and reporting of waste flows are not sufficient
control measures. There must also be established a clearly
defined administrative system of fines and penalties for non-
compliance with the rules of the system. Compliance with the
trading rules of the MEP market is easily obtained by requiring
43
-------
that all trades and transactions involving the permits be chan-
neled through the central market which can be operated under
the guidance of the EPA. No trade will be valid unless it oc-
curs under the auspices of the central registry. Rules re-
garding prices or price movements and regulations concerned
with the limitation of permit holdings can then be easily en-
forced. No fines or penalties need be imposed; instead, il-
legal transactions will not be allowed to occur.
Thus, the only enforcement measures necessary are those
designed to ensure compliance with the effluent limitations
implied by the pattern of permit holdings. For this purpose
we suggest an administered fine related to the asking price
of effluent permits in the MEP market. The fine should be
greater than the price of an effluent permit in order to en-
courage the use of the effluent permit market to allocate
discharges throughout a river basin. As the price of permits
rises the incentive to discharge illegally grows; consequently,
the penalty for non-compliance should increase.
The NPDES, Municipal Grant Programs, and the MEP System
Some of the details of how a MEP system might be meshed
with the NPDES are examined in Section 7. Under the system
suggested there, polluters are still required to apply for
NPDES discharge permits for 1977. Essentially, the machinery
of the NPDES would be retained with some major accommodations
for the MEP system. The major alterations that must be made
44
-------
are (1) provision for trading the marketable effluent permits,
and (2) provision for automatically altering the NPDES permits
to account for the changes in waste discharge allocation oc-
casioned by the MEP system.
Additionally, it is necessary to coordinate the MEP sys-
tem with the wastewater treatment grant programs of the federal
and state governments. These programs must be accounted for in
the determination and predictions of the responses of dis-
chargers to the MEP system as well as the evaluation of the
system1s contribution to the achievement of the legislative
goals. On the industrial side of the ledger the federal and
state corporate taxes must be considered.
The efficiency properties of the effluent permit system
depend on the market transactions to equalize the marginal
costs of waste treatment among polluters. If the price of the
permit in the market is $1.00 it is argued that dischargers
will reduce waste discharges up to the point at which the mar-
ginal costs of waste treatment are $1.00. To do more or less
would be more costly.
Due to the municipal waste treatment grant programs the
marginal resource costs of waste treatment are not entirely
reflected in a municipality's expenditures on treatment. For
example, if the subsidy rate is 40 percent, then a dollar
spent on waste reduction activities represents only a 60 cents
45
-------
out-of-pocket cost for the municipality. Similarly, for in-
dustrial dischargers the opportunity cost of waste treatment
expenditures is frequently less than 50 percent of the total
resource costs of pollution control measures.
The problem here with regard to the MEP system is that
dischargers facing different subsidy or tax schedules will not
allocate costs in the most efficient manner. The intent of
the MEP system is to lead to the equalization of the real re-
source costs of waste treatment. If the market price of the
permit is $1.00 and the resulting effective marginal treatment
costs to different dischargers is 40 cents and 60 cents respec-
tively, the marginal costs are obviously not equalized. This
problem is satisfactorily resolved by extending the municipal
subsidies and the corporate taxes so that they apply to the
marketable effluent permit. Thus, if the market price of the
permit is $1.00 the following situation obtains. The actual
cost of the permit to the polluter is (1-s) x $1.00, where s
is the subsidy or tax rate. The cost-minimizing polluter
treats wastes up to the point where the out-of-pocket marginal
costs of waste reduction equal the out-of-pocket cost of the
permit. Thus the marginal (out-of-pocket) costs of waste
treatment are (1-s) x $1,00. Since the waste treatment is
subsidized at the rate s, then the marginal costs in real re-
source terms can be found by adding the subsidy back into the
expression for out-of-pocket costs:
46
-------
(1-s) • $1.00 + s • $1.00
which equals $1.00. Thus, no matter what the subsidy rate,
the marginal cost in real resource terms of the waste reduc-
tion is equated with the cost of the permit; consequently, the
marginal costs of treatment for all polluters are equated.
This solution to the subsidy-tax problem has the adventitious
effect of reducing the cost of the permits to municipalities.
Under this system a question arises as to the proper sub-
sidy rate to apply. In many cases the subsidy rates for cap-
ital and for operating costs will differ. In that situation
the subsidy rate to be applied to the effluent permit should
be a weighted sum of the two subsidy rates, where the weights
are determined by the discount rate and the relative size of
marginal capital and marginal operating costs. If s^ is the
capital costs subsidy rate, s the operating costs subsidy
rate, r is the discount rate, and z is the prevailing ratio of
marginal operating and marginal capital costs, then the appro-
priate effluent permit subsidy rate is
s =lFT-z-jsk + ln^Jso '
where we have assumed that capital costs are incurred one time
only and that the corresponding marginal annualized costs are
rCv, where Cv equals marginal capital costs.
Jx JC
47
-------
The expression for s is derived as follows. If Ck and
C are unsubsidized marginal capital and operating costs then
total unsubsidized marginal costs are rCk + CQ. Subsidized
marginal treatment costs are
d-sk)rck + d-so)C0 .
The effluent permit subsidy rate, s, is chosen so that marginal
costs will be the same for both the subsidized and unsubsidized
dischargers. The unsubsidized discharger will equate marginal
costs with the permit price:
rCk + Co = P '*
and the subsidized discharger will equate marginal costs with
the subsidized permit price:
(l-sk)rCk + (l-s0)C0 = (l-s)p .
These two equations can be solved to find s. In equation 1
the result is given, where z is equal to C /C, .
O JK.
From equation 1 it can be seen that s approaches s, as z
JC
approaches zero, and s approaches SQ as z approaches infinity.
It is also apparent that in order to estimate s the discount
rate and the ratio of marginal operating to marginal capital
costs must be known. A practical approach would be to assume
average representative values for these, and calculate the
effluent permit subsidy rate, s, on that basis.
48
-------
This concludes the preliminary analysis of the different
aspects of a MEP system. The administrative aspects of the
system are dealt with in Section 7, and consequently are not
treated above. The remainder of the report is directed at the
evaluation of the MEP system and a comparison of that system
with other control options.
49
-------
NOTES
W. David Montgomery, "Market Systems for the Control of Air
Pollution," Ph.D. dissertation (Harvard University; Cambridge,
Massachusetts, 1971), and "Markets in Licenses and Efficient
Pollution Control Programs," Journal of Economic Theory, Vol.
5, No. 3 (December, 1972).
2
Within such a given "equivalent impairment" river segment a
change in location of point sources is insignificant. They
are all considered to cause an equivalent impairment per pound
of BP discharged. The detrimental effect to the river of a BP
discharge is modeled by the impairment function (Ref : "Effluent
Charges, Is the Price Right?" Meta Systems Inc p. 48).
I = K(BP/Q) (Flow of affected reaches
JMJJJVUJ i*J.ow
surface Area of affected reaches
(Typically K = 1.0, 6 = 0.4 to 0.6, y = 0.2 to 0.4)
Q is the effective dilution flow during low-flow warm tempera-
ture months (Q = 1/2 of the sum of the river flow at the waste
outfall and the basin outlet) . For cases where the segment of
concern is at a distance remote from the ocean, and the change
in Q over the segment is relatively small compared to the flow
at the basin outlet, then the impairment per pound of BP dis-
charged will be essentially the same over the segment and such
a reach can then be considered an "equivalent impairment"
segment.
50
-------
Section 3
Markets, Auctions, Externalities,
and the MEP System
This section presents a useful digression into the theory
of markets, auctions, and externalities, and the relation of
those theories to the use of marketable effluent permits. The
following three sections take a progressively more empirical
look at markets and the issues associated with the use of a
market mechanism to control water pollution.
The Theory of Markets
The relation of competitive equilibrium in allocating re-
sources is the subject of many of the important theorems of
microeconomics. A perfectly competitive market satisfies sev-
eral conditions: consumers and firms maximize utility and
profits respectively under conditions of free entry and free
exit, and perfect information; products are homogeneous; firms
and consumers are numerous and small relative to the total
size of the market; and choices of firms and consumers are
made without regard to other market participants. The ful-
fillment of these conditions can be shown to lead to economic
2
efficiency in the production and distribution of goods.
"Economic efficiency" is taken to be Pareto optimality: the
allocation of resources is Pareto-optimal if no consumer's
utility can be increased without reducing some other consumer's
51
-------
utility, and no firm's output can be increased without reduc-
ing some other firm's output or increasing some input.
Externalities—external effects in consumption and pro-
duction—can interfere with the attainment of Pareto optimal-
ity. Pollution is the classic example of an externality. If
the utility of one or a set of people is adversely affected by
the actions of a polluter, and there is no market to mitigate
those effects, then the outcome will often be a suboptimal dis-
tribution of resources. As Arrow shows, however, "by suitable
and indeed not unnatural reinterpretation of the commodity
space, externalities can be regarded as ordinary commodities,
and all the formal theory of competitive equilibrium is valid,
including its optimality." The reinterpretation of the com-
modity space involves the inclusion of pollution as a commodity
and the recognition that it enters into both production and
utility functions. Unfortunately, as Arrow points out,
Pricing demands the possibility of excluding nonbuyers
from the use of the product, and this exclusion may be
technically impossible or may require the use of con-
siderable resources. Pollution is the key example:
the supply of clear air or water to each individual
would have to be treated as a separate commodity, and
it would have to be possible in principle to supply to
one and not the other (though the final equilibrium
would involve equal supply to all). But this is tech-
nically impossible.4
And there is the further difficulty of small numbers:
52
-------
Each [newly-defined environmental] commodity . . . has
precisely one buyer and one seller. Even if a competi-
tive equilibrium could be defined, there would be no
force driving the system to it; we are in the realm of
imperfectly competitive equilibrium.5
Thus, the prospects for using a market in effluent permits to
achieve economic efficiency is viewed pessimistically by
Arrow for two classic reasons: the inability to exclude in-
dividuals from the benefits of pollution control and the
limited size of the resulting market. Marketable effluent per-
mits can, however, be used in a more limited fashion to assist
in the attainment of efficiency.
The Theory of theMEP System
Several writers have discussed possible arrangements in
which the use of a market can serve to implement pollution
control goals. Because of the public-good nature of water
pollution control—the impossibility of properly excluding and
charging the recipients of pollution control benefits—it is
impossible to achieve overall Pareto optimality. Consequently,
the level of overall water quality must be determined by
society, through the determination of the value of water pol-
lution control (a benefit function) or through the specifica-
tion of water quality or effluent standards. The MEP system
can then be used to achieve the specified degree of pollution
control in an efficient manner.
53
-------
The problem of market size—only one buyer and one seller
—which accompanies Arrow's expansion of the commodity space
is not necessarily a problem in the MEP market. Pollutants
produced at one source are often perfect substitutes for pol-
lutants produced at other sources; consequently there will
often be many possible buyers and sellers in a market for ef-
fluent permits. This opens the possible use of the MEP system
to meet overall water quality or effluent standards.
The theoretical basis for the use of effluent permits for
the efficient achievement of environmental standards has been
developed by Montgomery. He proves the existence of a competi-
tive equilibrium, satisfying the condition of total cost mini-
mization, in the market for effluent permits. In "Markets in
Licenses and Efficient Pollution Control Programs," Montgomery
first constructs cost functions relating each level of emis-
7
sions to the polluters' costs. He shows that under the stan-
dard assumptions concerning the cost function of firms, the
emission cost function is convex. This is important in the
demonstration that the total costs of emission control are
minimized within a MEP system.
Montgomery defines a set of licenses which confer the
right to emit pollutants at a certain rate. Each of the pol-
luters is given some initial allocation of licenses. The
polluter's problem is then to maximize profits by, among
other things, minimizing the costs of emission control plus
54
-------
the cost of purchasing licenses, subject to the constraint
that emissions be equal to or less than the amount of licenses
held by the polluter. A market equilibrium exists if there is
some set of prices of licenses such that when each polluter
minimizes the sum of the cost of reducing emissions and the
net cost of buying and selling licenses, excess demand for
licenses is non-positive, and excess supply of a license re-
sults in a license price of zero. This definition covers (1)
the condition whereby the prices of licenses be such that sup-
ply equals demand and (2) relevant corner conditions.
Montgomery differentiates between emission licenses and
pollution licenses, licenses which relate respectively to
emission standards and ambient standards. He establishes the
existence and efficiency (total cost minimization) of equilib-
rium in systems of both emission and pollution licenses. The
market for emission rights suffers from more restrictions than
the market for pollution licenses. This is due to the fact
(discussed above in Section 2) that it is not always desirable
to allow the transfer of emission rights on a one-for-one
basis. The exchange of licenses between polluters at different
locations may adversely affect the quality of water due to
spatially differential effects on quality. If, however, the
transfer coefficients relating emissions to quality are the
same for all polluters, or if environmental standards are in
terms of total emissions, then the market for emission rights
does not suffer this disadvantage.
55
-------
A Dutch auction (of the type discussed in Section 2) for
the distribution of effluent permits can achieve the same ef-
ficiency goals as the systems described by Montgomery. Under
the same conditions concerning the motivation of firms and
the convexity of cost functions, it is clear that a Dutch auc-
tion leads to an equilibrium with the desired efficiency
properties. This is true because the definition of a market
equilibrium for the Dutch auction as well as the functions
and constraints governing the Dutch auction are identical to
those in the Montgomery formulation.
Montgomery has served to provide the idea of market ef-
fluent permits with the theoretical underpinnings of micro-
economics. His important contribution is the demonstration
that the MEP system can provide the efficient achievement of
environmental standards if the competitive conditions are met.
Problems of Imperfect Competition
The efficiency properties of the MEP system depend on
the assumptions of a competitive equilibrium, in particular
on the assumption of a sufficiently large number of market
participants to inhibit market manipulation. As is discussed
elsewhere in this report, the market for effluent permits will,
for many river basins, suffer from the number or size dis-
tribution of polluters. Various theoretical solutions to the
duopoly and oligopoly have been formulated which show the
56
-------
equilibria that result under different assumptions of imperfect
competition. Since it is relevant to the Mohawk simulation
study of Section 6, the Cournot solution8 is described here,
along with the market problems of effluent permit auctions as
9
analyzed by Rose.
Under the Cournot assumption each firm acts as though its
actions do not affect those of other firms. Each firm does,
however, incorporate the other firm's output decision into
its planning process. In the case of marketable effluent per-
mits, the Cournot assumption is that each polluter assumes
that the other polluters will react, to the price of a permit
as cost-minimizing price-takers. In the Cournot solution, as
the number of market participants is increased, the output of
each represents a progressively smaller proportion of the in-
dustry total, and the effects of an individual on the other
market participants is diminished. In the limit the Cournot
solution approaches the perfectly competitive result. With
a small number of market participants, however, the competi-
tive results will not be approximated. In that case, imper-
fect competition results in a loss in efficiency, and is one
of the main problems anticipated in the use of a MEP system.
Rose analyzes the problem of the manipulation of an
auction-type bidding process. The auction is designed to
achieve the optimal amount and distribution of emission
rights. Rose assumes that the public authority knows the
57
-------
marginal pollution damage function, but not the treatment cost
functions, and seeks to find the optimal treatment configura-
tion. The problem of the regulatory authority is to infer the
polluters' marginal cost of treatment functions from the pol-
luters' bidding. Rose illustrates the problems that occur
when purchasers of the effluent permits perceive themselves as
having some measure of control over the permit prices through
their bids:
In these circumstances a strategy of underbidding, in
which, at any price, fewer rights are requested than
would be called for in a perfectly competitive situation,
may be advantageous to these firms. However, these "non-
truthful" bids, i.e., not reflective of marginal abate-
ment costs, result in the generation of false signals to
the central authority and ultimately excess expenditures
for clean-up activities.-^
Rose's paper demonstrates that the regulatory authority can
infer the polluters' marginal treatment cost functions from
their bidding behavior even under some conditions of imperfect
competition. The most important point of the paper as it re-
lates to this study is the illustration by Rose how problems
of market manipulation can interfere with the distribution of
effluent permits in an auction.
The problem of market manipulation, both for the ongoing
permit market and the initial permit auction, is a significant
one for the MEP system. It is treated further in the sections
below.
58
-------
NOTES
This discussion relies on Kenneth J. Arrow, "The Organiza-
tion of Economic Activity: Issues Pertinent to the Choice of
Market Versus Nonmarket Allocation," in Joint Economic Commit-
tee, The Analysis and Evaluation of Public Expenditure; The
P.P.B. System (Washington, D.C., 1969), and James M. Henderson
and Richard E. Quandt, "Market Equilibrium," Chapter 4 in
Microeconomic Theory (McGraw-Hill; New York, 1958), pp. 85-125.
For discussions of competitive equilibrium and its relation
to Pareto optimality and welfare maximization see F. M. Bator,
"The Simple Analytics of Welfare Maximization," American Eco-
nomic Review, Vol. 47 (March, 1957), pp. 22-59; J. de V. Graaff,
Theoretical Welfare Economics (Cambridge University, 1957),
Chapter IV; and Paul A. Samuelson, Foundations of Economic
Analysis (Harvard University; Cambridge, Massachusetts,1948),
Chapter VIII.
Arrow, "The Organization of Economic Activity. . . ,"p. 57.
4 Ibid., pp. 57-58.
5 Ibid., p. 58.
For example, J. H. Dales, Pollution, Property, and Prices
(University of Toronto; Toronto, 1968) and H. D. Jacoby and
G. W. Schaumburg, "Marketable, Fixed Term Discharge Effluent
Permits," unpublished, reported in Effluent Charges on Air
and Water Pollution; A Conference Report, Edward I. Selig,
reporter (Environmental Law Institute; Cambridge, Massachusetts,
1973), pp. 36-43.
7 W. David Montgomery, "Market Systems for the Control of Air
Pollution," Ph.D. dissertation (Harvard University; Cambridge,
Massachusetts, 1971); "Markets in Licenses and Efficient Pol-
lution Control Programs," Journal of Economic Theory, Vol. 5,
No. 3 (December, 1972), pp. 395-418; and "Artificial Markets
and the Theory of Games," Social Science Working Paper No. 8
(California Institute of Technology; March 1972).
8 Descriptions of different oligopoly solutions are given in
Tun Thin, Theory of Markets (Harvard University; Cambridge,
Massachusetts, 1960) and Robert L. Gustafson, "Firm^Price
Output Behavior in Imperfectly Competitive Markets, in
Agricultural Market Analysis, Vernon L. Sorenson, editor
(Michigan State University; East Lansing, Michigan, 1964).
59
-------
NOTES (continued)
Marshall Rose, "Market Problems in the Distribution of
Emission Rights," Water Resources Research, Vol. 9, No. 5
(October, 1973), pp. 1132-44.
10 Ibid., p. 1138.
60
-------
Section 4
Industrial Organization Theory
and the MEP System
Within the field of industrial organization, the theory
of workable competition has been developed as an attempt to
indicate how the structure of a market and the conduct of in-
dividual firms within a market affects its performance. It
is an attempt to indicate the practically attainable desirable
standards for individual markets. The theory of industrial
organization and the concept of workable competition are use-
ful in the examination of the marketable effluent permit sys-
tem. They provide both a language with which to discuss the
practical evaluation of the workings of the market as well as
guides for the assessment of those aspects of the market that
have the greatest bearing on the goals of the MEP approach.
For convenience in analysis the various characteristics
of a market have been traditionally divided into three mutu-
ally dependent categories: performance, conduct, and struc-
ture. Market performance is the end result of market actions
—prices, output levels, production cost levels, etc.—arrived
at in the course of the workings of the marketplace.
. Market conduct refers to the actions and tactics of the
different buyers and sellers within the marketplace—for ex-
ample, whether firms collude in the establishment of price
61
-------
or output levels. Market structure is described by the organi-
zational characteristics of the market, such as the degree of
seller and buyer concentration and the extent of product dif-
ferentiation. The elements of performance/ conduct and struc-
ture provide useful categories in which to discuss the norms
that should be applied to the workings of the marketplace. In
the case of effluent permits, generalized performance norms
have been discussed above. They are efficiency, equity, and
administrative and political feasibility. The literature and
theory of workable competition can be used to develop more
specific norms of workable competition that can be applied to
the MEP system in order to determine whether the goals of the
system are likely to be achieved.
Economists dealing with the formulation of norms of mar-
ket behavior have had to move beyond the concept of perfect
competition (requiring an infinite or very large number of
relatively small buyers and sellers of a standardized product,
etc.) and make an effort to establish standards sufficient for
judging the workability of actual markets. It is clear that
they have not been successful in determining quantitative
normative standards that can be applied in all instances to
determine the workability of markets. For example, they have
failed to specify the number and distribution of sellers and
buyers needed to preclude market collusion. Their efforts
are helpful, nevertheless, in setting out guidelines and in
62
-------
flagging the important variables that should be considered in
the evaluation of any market.
Many of the norms for structure, conduct, and performance
that are dealt with in the industrial organization literature
are not relevant to the special regulatory character of the
MEP system. For example, the level of profits is an important
performance norm for many markets, but is not applicable in
the evaluation of the marketable permit system. The criteria
of workability for a market depend on the goals of that mar-
ket. For the effluent permit system those goals are somewhat
more narrowly circumscribed than for typical industrial mar-
kets: they are to achieve the aims of the 1972 Federal Water
Pollution Act in an efficient, equitable, and politically
feasible manner. The standard of comparison for the MEP sys-
tem is provided by other alternative control measures and the
extent to which they meet the criteria of efficiency, equity
and feasibility.
In this section the important elements of structure and
conduct that are relevant to the MEP system are isolated and
discussed.
Conduct Norms
Many of the elements of market conduct that are impor-
tant determinants of market performance are automatically
accounted for in the design of the MEP system. For example,
63
-------
discriminatory buying and selling, the use of illegitimate
pricing methods, unwanted collaboration between buyers and
sellers, and other potential market problems are avoided in
the MEP system by the use of a regulated central market. There
are, however, at least four areas of conduct that are poten-
tially troublesome and worthy of discussion.
The first is the basic question of the response of dis-
chargers to the system: Is it true that they will act to min-
imize costs or will some other motivations (perhaps bureau-
cratic) govern their response? This is an important question
since many of the efficiency properties of the MEP system are
based on the cost-minimizing response of dischargers.
With regard to industrial dischargers, it seems safe to
assume that they will pursue a cost-minimizing path in re-
sponse to the MEP system. Indeed, under a wide variety of
motivational assumptions—including profit maximization, cost
minimization, and growth maximization—firms will minimize
the costs of waste treatment and disposal. A more important
question arises with regard to the municipalities. Since they
are not business firms with profit-oriented accounting systems
they are in a less advantageous position to minimize costs.
However, waste treatment is measurable and well defined and
cities have had long experience enlisting the aid of compe-
tent engineers to design waste control systems that minimize
costs to taxpayers. It is definitely easier for a city to
64
-------
respond as a cost-minimizer in the area of waste control than
for any other public services such as education.
The second potential conduct problem has to do with the
financial power and motivations of market participants. The
market will not function as desired if predatory buying and/or
no selling of permits occurs. If a buyer or a set of buyers
has the financial power to monopolize the use of the permits
and does so in order to exclude competitors from the region
then the market will not serve its purpose in the manner in-
tended. Several ways to discourage such behavior have been
presented above. These include the staggering and reissuance
of permits on a regular basis to provide a source of permits
to entering or growing dischargers, the limitation of the
amount of permits any one discharger can purchase and hold, and
other rules designed to encourage the orderly operation of the
market.
In some cases not selling permits (even in the face of
large increases in the permit price) is a legitimate response
of a discharger to future uncertainties in the growth of the
firm or municipality or uncertainties in the policy of the
regulatory agency. In these cases the worth of the permits
to the dischargers may legitimately be higher than the bid
price. In other cases the withholding of permits from the
market may result from the attempt by a discharger to increase
the price of the permits and/or to exclude others from the
65
-------
market. These are not legitimate uses of the market power of
the discharger and must be discouraged by, for example, the
use of staggered-term permits. In some cases the market struc-
ture will prevent these possible adverse effects automatically.
If the number of market participants is great enough and the
distribution of permits wide enough, then one buyer or seller
will be unable to affect the market price significantly through
independent action. Such a happy situation will prevent market
manipulations of the type mentioned here.
This raises the third problem of market conduct, the col-
laboration of different market participants. There are two
sides to this issue. First, it is desirable for different
dischargers to take advantage of the economies of scale in-
herent in the treatment of wastes. This often requires a good
deal of collaboration on the design, construction and opera-
tion of treatment facilities. In a MEP system such collabora-
tion might also require coordination in the procurement of per-
mits. On the other side of the coin, however, collaboration
of market participants for the sole purpose of market manipula-
tion is contrary to the workings of the market and should be
prevented. Consequently, there must be rules prohibiting the
cooperative buying or holding of permits by dischargers unless
such buying is accompanied by plans to use joint facilities
for the treatment of wastes.
66
-------
The fourth and final problem of market conduct is related
to the other three: the MEP system must not disrupt the or-
derly exiting, entering, growth and attrition of industrial
firms and municipalities from the river basin system. One way
to assure that participants enter and exit from the market in
a reasonable fashion is to assure that the potential three
problems outlined above are avoided. Barriers to entry and
the failure of businesses that can be associated with the MEP
system will be kept at a minimum if the exclusionary tactics
and illicit collaboration of market participants are avoided.
However, even if these problems are avoided, one of the natural
effects of a well-functioning MEP system will be to slow the
growth of municipalities and firms, and, in a few marginal
cases, prevent the entry of a business concern or precipitate
its demise. These effects are more a result of the 1972
Amendments than the control tool used for their implementation.
Pollution control requirements are going to cause some disloca-
tions simply because that is part of the cost of meeting the
goals of the legislation. The beauty of the MEP system is
that these costs are distributed in a reasonably efficient
manner.
Structure Norms
The elements of conduct and structure of markets overlap;
as with market conduct many of the important elements of mar-
ket structure that determine market performance are automatically
67
-------
accounted for in the design of the MEP system. For example,
the regulatory authority can assure that there is a standard-
ized "product" on the market (homogeneous certificates confer-
ring a specific privilege), trading procedures can be regu-
lated to assure arms-length transactions, and the dissemina-
tion of adequate information concerning bid and sell prices
can be assured by regulatory actions. There are, nevertheless,
areas of market structure that are likely to entail difficul-
ties in a MEP system.
The first, and the most pervasive, problem is that of
market concentration, and the second is the problem of market
size. The concentration of the market—the distribution of
the relative sizes of buyers and sellers—is important because
it bears on the problems discussed with respect to market con-
duct. Predatory practices, price fixing, and the like are
much more likely to occur in situations where one or a few
market participants control the major share of the market.
This is a recurring market problem in the literature of indus-
trial organization, as the extent of the literature on the
2
effects of market concentration on market performance attests.
MEP markets are likely in many cases to be dominated by
one or two large dischargers, principally municipalities
wherein most of the smaller dischargers are using the munic-
ipal treatment system. The extent of this problem can be
assessed by looking at a representative sample of river basins
68
-------
and computing concentration ratios in terms of the present and
projected waste discharge of polluters. If, for example, 95
percent of the BOD discharges in a given river basin are from
one discharger, then the likelihood of the market's being
dominated by that discharger is great, as is the probability
of market problems.
For the portion of the Mohawk River Basin examined below
in Section 6, approximately 45 percent of the total waste dis-
charges in the basin are attributable to one city (Utica), and
the two cities (Utica and Rome) account for about 58 percent
of the total discharges. As is shown in Section 6, this ap-
pears to present no real threat to the MEP market. Utica is
unable to dominate the market even when assumed to have per-
fect information regarding the responses of other polluters.
An example in Section 6 does demonstrate, however, that the
problems of market domination are real in a case where two
dischargers comprise the market.
A related problem is the size of the market in terms of
the number of buyers and sellers actively engaged in market
transactions. The stock markets in the United States work
reasonably well in spite of the fact that a low percentage
(approximately 1 percent in the New York Stock Exchange) of
the total number of outstanding shares is traded on any given
day. other markets function with smaller numbers of shares,
however, and this may not be a problem for typical river basins,
69
-------
A second important structural problem in the MEP system
is the presence of taxes and subsidies. These have distorting
effects and can prevent the market from achieving any degree
of efficiency. Ways of dealing with the distortions in in-
centives that are engendered by taxes and subsidies are con-
sidered in Section 2. The suggestions there were (1) equalize
capital and operating subsidy rates, (2) subsidize the purchase
of permits by municipalities, (3) enforce cost-sharing require-
ments for joint industrial-municipal treatment, and (4) for
the purposes of corporate taxation treat the purchase of a
permit just as the purchase of any other asset.
Conclusions
As Sosnick states, "no practicable set of structure or
conduct requirements, and especially the incomplete set
usually mentioned, can assure that performance will be satis-
factory. Whether performance is favorable can be inferred
only with data on performance."
In the final analysis it is impossible to predict that a
market such as the MEP system will function as desired. How-
ever, it is apparent from an examination of the MEP systems in
light of the industrial organization literature that the pri-
mary problems of conduct and structure have to do with the
size and distribution of dischargers and the conduct of large
dischargers. The market cannot be expected to function
70
-------
effectively if the size of the market is too small or if the
market is heavily concentrated and under the direct influence
of a small number of participants.
The industrial organization literature does not provide
specific/ definitive guides as to how small or concentrated
markets can be without encountering significant market prob-
lems. As we saw in Section 3, the Cournot solutions to the
oligopoly problem suggest that in a simple situation the price
with ten sellers in the market does not differ too much from
the price with 1,000 sellers. In one study Bain concludes
that a "critical level" of concentration occurs roughly when
70 percent or more of the market is controlled by the eight
largest firms. Thus we have some assurance that if more than
ten dischargers with equally distributed shares of the total
discharges are present in the river basin, the MEP system is
likely to function effectively. Beyond that, we cannot speak
with any confidence. With regard to the size of the market,
it seems safe to assume that the amount of money involved in
waste treatment and the significant amounts of wastes that
are discharged into the nation's waterways are a guarantee
that the market will be large enough to provide for orderly
buying and selling of permits.
71
-------
NOTES
The concepts of industrial organization and workable com-
petition are discussed in Joe S. Bain, Industrial Organization
(Wiley, New York, 1967) and Stephen H. Sosnick, "A Critique of
Concepts of Workable Competition" in the Quarterly Journal of
Economics, LXXII (Cambridge, Massachusetts, August 1958), pp.
380-423.
2
See, for example, N. L. Collins and L. E. Preston, Concen-
tration and Price-Cost Margins in Manufacturing Industries
(University of California Press, Los Angeles, 1968) and William
G. Shepherd, "The Elements of Market Structure," in Review of
Economics and Statistics, 54(1) (February 1972), pp. 25-37.
Op. cit., p. 397.
4
Joe S. Bain, Barriers to New Competition (Harvard Uni-
versity, Cambridge, Massachusetts, 1956).
72
-------
Section 5
Analogous Auctions and Markets
There have been many studies of industrial markets and
some of the work on the questions of concentration are relevant
to this study. An example is Bain's work that is mentioned in
the previous section. In addition, there are many markets and
auctions that are in one way or another closely analogous to
the MEP system. Examples include the market for liquor li-
censes, the taxi medallion market, the Treasury bill auction,
and the federal funds market. The taxi medallion license, for
example, shares many of the characteristics of the market for
effluent permits: a fixed number of permits conferring spe-
cific rights on the holder are traded among market participants,
This section reviews some studies of specific markets and
auctions in an attempt to gain insight to their workings and
to learn the extent to which they meet the criteria of effi-
ciency and equity. Information relevant to the evaluation of
the MEP system is highlighted. Unfortunately, those markets—
the markets for taxi medallions and for liquor licenses—that
are most nearly parallel to the MEP market are the ones that
have been studied least. Others, such as the Treasury bill
auction, are the subject of numerous papers.
73
-------
United States Treasury Bill Market
The weekly Treasury bill auction has been studied exten-
sively1 and its organization and functioning are known in de-
tail. At present the Treasury releases an announcement each
week inviting tenders for a specified amount of 91-day and
182-day issues. Bids are normally tendered Monday and delivery
is made to the successful bidders on the following Thursday.
Bidders submit one or more bids for chosen amounts of a bill
issue at various prices. The Treasury arrays the bids in order
of decreasing price and, beginning with the highest bid, ac-
cepts as many bids (at successively lower prices) as is neces-
sary to cover the amount of bills issued.
Since each of the successful bids is filled at the price
submitted, the Treasury is effectively practicing price dis-
crimination against the purchasers of the bills. This is in
contrast with a competitive auction procedure in which all
bids are filled at the market clearing price. Friedman has
proposed that the Treasury discontinue the use of price dis-
crimination in the Treasury bill market by making all sales
2
at the "stopout price." (The "stopout price" is the lowest
successful bid.) He contends that this would actually increase
the Treasury's receipts for a given volume of bills for two
reasons.
First, under the discriminatory system a bidder is penal-
ized if he pays more than the stopout price. Consequently,
74
-------
effective bidding requires the accurate assessment of the prob-
able bids of other market participants in order to be able to
submit a bid only high enough to insure that the bidder is
fairly likely to have his order filled. This results in the
submission of bids below those that would be submitted if no
bidder were concerned about the possibility of paying a higher
price than other market participants.
To illustrate, suppose that a bidder anticipates a market
clearing price of $10, but is willing to pay as much as $12 if
necessary. In the competitive bidding system the bidder could
bid $12 and be certain of obtaining the item at or below his
demand price. If the market clearing price turns out to be
$11 then the bidder receives the item for $11 and is satisfied.
In contrast, the bidder would be reluctant to bid $12 in a dis-
criminatory bidding system. Since his estimate of the market
clearing price is $10 he will bid at or slightly above that
amount. A bid of $12 will end up costing $12, while a success-
ful bid at a price closer to $10 will save him money. Thus,
the incentive to bid $12 is countered by the desire to save
part or all of the excess over $10. This results in lower
bids and, consequently, a lower market price.
Second, Friedman contends that the discriminatory system
places a high premium on knowing the workings of the bill mar-
ket. Consequently, investors without the necessary resources
75
-------
or time cannot compete effectively. This narrows the market
to a degree that can lead to collusive activities.
The first of these contentions has been tentatively con-
firmed by the market experiments of Smith. The implication
in terms of the revenues from auctioning effluent permits is
not significant. However, Smith's results do imply that the
use of a competitive market as opposed to a discriminatory bid-
ding system is potentially more useful in obtaining informa-
tion about bidders' true demand schedules. Thus in the MEP
system, competitive bidding is likely to provide better in-
formation about the marginal costs of waste treatment. The
Dutch auction, which is suggested in Section 2 as a possible
means of effluent permit distribution, is a competitive bid-
ding system slightly different operationally from the one sug-
gested by Friedman, but equivalent in terms of the end results.
This result also suggests that the efficiency properties of
the market are more likely to be realized in a competitive
bid than in a discriminatory bid. Since bidders are more
likely to bid in accordance with their true demand schedules,
the competitive form of bidding is more likely to lead to the
efficient allocation of marketable permits.
Smith also reaches the interesting conclusion that the
outcome of a discriminatory auction may depend crucially on
the number of bidders, whereas the outcome of the same offer-
ing under competition may be relatively independent of the
76
-------
number of bidders. Stated differently, the market clearing
price in a competitive bid is less dependent on the number of
market participants than in a discriminatory bid. Smaller
numbers are more likely to lead to market distortions in a
discriminatory bid. This is another point in favor of the use
of a competitive market in the distribution of effluent permits.
Taxi Medallion Markets
The market for taxi medallions is similar in many respects
to the market for effluent permits. Taxi medallions confer on
the holder a specified privilege—to operate a taxi under a
given set of regulations—and are traded among participants in
the taxi business. The number of medallions is often limited
by statute to an absolute number or to a number based on the
population of the area of service. The restriction can be on
the number of cabs in a city, on the number within given zones
of a city, etc.
In Boston and New York City the right to operate a taxi
is limited to holders of medallions. The number of medallions
in New York is limited by a 1937 law to 13,566. However, dur-
ing the depression and war nearly 2,000 medallions were sur-
rendered and were never reissued. The remaining medallions
are split approximately 8 to 5 between fleet and independent
owners. Transfers between the two classes of owners is pro-
hibited in the New York market. Boston also limits the number
77
-------
of taxi medallions by statute. There are 1,525 taxi medallions
of which 737 are fleet-owned and 788 are owned by independents.
Although trading is not prohibited between the two classes of
owners, the fleet owners do not sell medallions to individuals.
In both Boston and New York City the medallion markets
provide evidence that a relatively small market can operate
reasonably well in terms of providing a ready opportunity to
buyers and sellers (at the going price). In Boston, 1970
medallion prices were in the neighborhood of $30,000; in New
York City independent medallions sold in 1970 for around $23,000
while fleet medallions were about $1,000 less.
While providing evidence that markets with limited numbers
of a homogeneous product can function, the market for taxi
medallions also exhibits some of the market problems that pose
probable barriers to the effective working of the MEP system.
In Boston the fleet owners, through their refusal to sell me-
dallions to independents, are essentially acting as monopolists.
They realize that it is in their joint long-term interest to
control a large share of the market in order to keep cab fares
up and, more importantly, to maintain the power to prevent the
issuance of more medallions. The latter has been suggested
many times since the law limiting the number of medallions to
1,525 was passed in 1930.
78
-------
The last point—the difficulty in altering the number of
medallions—is pertinent to the formulation of a MEP system.
It is politically difficult to alter the number of rights,
whether they be taxi medallions or effluent permits, once they
are issued. For this reason, the market for effluent permits
should be established as far as is possible with the effluent
permits bearing definite expiration dates and with specific
provisions regarding the reissuance of the permits.
The problem of one class of sellers, say industrial pol-
luters, refusing to sell to a specific class of buyers, say
environmentalists, can be avoided in the MEP market by requir-
ing all trades to take place with the central registry acting
as the middleman.
Offshore Oil Leasing Market
Many theoretical and empirical studies of bidding strat-
c
egies have been conducted. Empirical studies of competitive
sealed bidding covering many years of data and different situa-
tions show that the bids tend to be lognormally distributed.
One market that has been the object of many studies is the
auction for offshore oil leases. The Department of the In-
terior conducts the auction for leasing rights to specified
offshore plots on the continental shelf. Sealed bids are sub-
mitted which have historically tended to be lognormally dis-
tributed for any given tract.8 Theoretical justification of
79
-------
the empirical results is found in the concept of multiplica-
tive errors that naturally arise in the evaluation of (uncer-
tain) offshore oil drilling prospects. If multiplicative
errors are involved in the process of estimating the worth of
a tract, then bids for tracts would tend to be lognormally
g
distributed.
The implications for the evaluation of the MEP system are
not profound. They are simply that (1) a working market can
be devised and operated for allocation of a resource by the
government and (2) the behavior of market participants appears
to conform to reasonably "good" market behavior, i.e., behavior
consistent with rational, independent bidding behavior.
Conclusions
Information on markets that would be useful for the eval-
uation of the MEP system is sparse. A prime example is the
lack of information on the market for liquor licenses which
is analogous in many ways to the MEP system. Even for the
three markets discussed above, facts useful for the evaluation
of the MEP system are few and far between. Nevertheless, some
relevant conclusions from the Treasury bill, taxi medallion,
and oil leasing market studies are presented above.
80
-------
NOTES
Examples are Andrew Brimmer, "Price Determination in the
United States Treasury Bill Market," Review of Economics and
Statistics, Vol. XLIV, No. 2 (May, 1962); Deane Carson, "Trea-
sury Open Market Operations," Review of Economics and Statis-
tics, Vol. XLI, No. 4 (November, 1959); Henry Goldstein, "The
Friedman Proposal for Auctioning Treasury Bills," Journal of
Political Economy, LXX, No. 4 (August, 1962); and Milton
Friedman, A Program for Monetary Stability (Fordham University;
New York, 1960).
2
Hearings Before the Joint Economic Committee on Employment,
Growth, and Price Levels, Part 6A (Washington, B.C., 1959),
pp. 1148-1153.
Vernon L. Smith, "Experimental Studies of Discrimination
Versus Competition in Sealed-Bid Auction Markets," Journal of
Business, Vol. 40 (1967), pp. 56-84.
4 Ibid., p. 70.
This section relies primarily on the following sources:
Sandi Rosenbloom, "Taxis, Jitneys, and Poverty," Transaction
(February, 1970), pp. 47-54; William A. Strauss, "The City of
Boston and its Taxicabs," unpublished paper, Harvard University
Public Policy Program (May, 1970); Edmund W. Kitch, Marc
Isaacson, and Daniel Kasper, "The Regulation of Taxicabs in
Chicago," The Journal of Law and Economics (October, 1971),
pp. 285-350; and M. E. Beasley, "Regulation of Taxis," The
Economic Journal (March, 1973), pp. 150-172.
6 Examples are Michael H. Rothkoff, "A Model of Rational Com-
petitive Bidding," Management Science, Vol. 15, No. 7 (March,
1969), pp. 362-73; R. B. Wilson, "Competitive Bidding with
Asymmetric Information," Management Science, Vol. 13 (July,
1967), pp. 816-20; and F. Edelman, "Art and Science of Com-
petitive Bidding," Harvard Business Review, Vol. 43 (July-
August, 1965), pp. 53-66.
7 For examples see J. Aitchison and J. A. C. Brown, The Log-
normal Distribution (Cambridge University; Cambridge, England,
1957); and John J. Arps, "A Strategy for Sealed Bidding,"
Journal of Petroleum Technology, Vol. 17 (September, 1965),
pp. 1003-1009.
81
-------
g
Arps, "A Strategy for Sealed Bidding"; Chester R. Pelto,
"The Statistical Structure of Bidding for Oil and Mineral
Rights," Journal of the American Statistical Association, Vol.
66 (September, 1971), pp. 456-60; and P. B. Crawford,^exas
Offshore Bidding Patterns," Journal of Petroleum Technology,
Vol. 22 (March, 1970), pp. 283-89.
9
See Keith C. Brown, "The Distribution of Louisiana Outer
Continental Shelf Lease Bids," Land Economics, Vol. 43 (August,
1967), pp. 354-57; and Crawford, "Texas Offshore Bidding
Patterns."
82
-------
Section 6
Mohawk River Simulation Model
To help examine the workings of the marketable effluent
permit system a computer simulation model was developed using
data from the Mohawk River Basin. The model provides esti-
mates of the important cost, emission, and control parameters
that would be assoicated with a MEP system. Consequently,
the results of the model can be used to discover and illus-
trate possible consequences of using this type of pollution
control instrument.
The inputs to the model include treatment cost and
waste reduction data for eight Mohawk River municipalities.
These are used to generate outputs based on the following
assumptions:
1. municipalities, when faced with the requirement
to buy effluent permits, will act so as to mini-
mize their total costs, i.e., they will buy the
number of permits and treat the amount of wastes
consistent with the minimization of the present
value of the sum of waste treatment costs and
effluent permit costs;
2. the effluent permit price will be the market-
clearing price, i.e., the price that equates the
given supply with the sum of the municipalities'
demands;
3. the alternative to buying permits is to reduce
waste discharges as much as is technically possi-
ble (as indicated by the treatment cost data);
4. all quantities—costs, effluent quantities, etc.—
are known with certainty.
83
-------
Using these general assumptions, and others that are specific
to the different model formulations, the model is used to
generate outputs. The most interesting of these are the
costs to polluters for waste treatment and permit purchases,
the real resource costs of waste treatment, the number of
permits purchased by municipalities, and the permit price.
The inputs, assumptions, and outputs of the simulation model
are discussed further below.
The Mohawk Data
This part of the study focuses on the Mohawk River
Basin, in central New York State. The Mohawk is a tributary
of the Hudson, originating in the Adirondacks north of Rome.
Uses of the river and its tributaries include navigation
(April - December), power generation, municipal water supply
(the lower Mohawk, below Schenectady only), flood control,
and recreation (boating and fishing, although the latter
use is declining because of increasing pollution). Flow is
systematically regulated by means of locks and dams, because
of navigation requirements. In the upper Mohawk, summer
flow varies from 130 cubic feet per second (cfs) at Rome
(milepoint 130) to 300 cfs at Herkimer (milepoint 87); below
Herkimer, it is about 560 cfs. The pollution control history
of the Mohawk Valley has been one of municipal irresponsi-
bility. Before 1971, no town had secondary treatment, and
many had none at all. Utica, for example, with a population
84
-------
of 150,000, discharged raw sewage to the river prior to 1971.
The simulation centers on eight municipalities on the
upper Mohawk. Table 6-1 presents pertinent information con-
2
cerning these cities, and Table 6-2 gives, for each muni-
cipality, estimate costs and associated waste removal for
seven waste treatment processes. The cost data which are
described in more detail in Appendix B, were derived from
data on typical municipal treatment plants with design flows
of 1, 10, and 100 million gallons per day, with an average
pollutant concentration of 200 mg/1. The economic life of
the equipment is assumed to be 25 years. As Table 6-1
shows, pollutant loads for the eight cities studied actually
vary from 56 mg/1 to 625 mg/1, while design flows of existing
or proposed plants run from 1 to 27 million gallons per day.
To provide the individual cost schedules, the basic cost
data were adjusted according to the following approximations.
0£
Cost is assumed to be a function of flow: C = kQ , where
C = cost, Q = design flow, and k and a are constants. Values
for k and a are found for each city by substitution in the
following equations:
log10Q1 - log10Q2 f
with Q and Q taken as the high and low flow values nearest
JL £••
to that of the plant, and C, and C2 the costs corresponding
to those flow designs. Then, k = £-. Further adjustments
Qa
85
-------
Table 6-1
CO
Cit}
Rome
Utica
Ilion
Herkimer
Little Falls
St. Johnsville
Ft. Plain
Canajohaire
Mohawk River Basin
River
Milepoint
123
104
87
87
80
70
64
61
1970
Census
Population
50,148
150,700
9,808
8,960
7,629
2,089
4,126
2,686
Design*
f low,mgd
16.5
27.0
4.0
1.7
5.6
2.0
1.0
2.6
Cities
BOD
load
mg/1
56
127
151
156
93
258
625
278
Raw BOD
Ibs/day
7,790
28,830
5,000
2,210
4,330
4,280
5,180
6,000
Raw BP
Ibs/day
31,052
105,389
19,048
7,713
14,618
14,211
17,289
19,559
Assumed
treatment
level
Primary
Secondary
None
Secondary
None
None
None
. None
*for existing or proposed treatment plants
-------
Table 6-2
Removal
Scheme*
1
2
3
4
5
6
7
1
2
3
4
5
6
7
Wastewater Treatment
BOD Removed
Ibs/day
2,781
5,009
6,123
6,536
6,536
6,957
7,650
10,091
23,064
24,930
26,235
26,235
27,100
28,542
BP Removed
Ibs/day
Rome
6,872
12,920
15,806
22,513
25,345
26,073
27,269
Utica
22,961
51,307
57,802
86,091
94,926
96,577
99,265
Costs
Capital Cost
($)
2,343,000
4,498,500
4,967,000
6,499,000
7,185,600
8,150,000
9,746,000
4,974,900
9,334,000
10,296,000
13,706,000
15,246,000
17,452,000
20,794,000
Maintenance
& Operation
Cost ($/yr)
184,371
253,000
327,770
557,400
620,700
663,800
759,000
388,360
526,000
672,700
1,119,500
1,259,000
1,324,000
1,515,800
87
-------
Table 6-2 (continued)
Maintenance
Removal
Scheme*
1
2
3
4
5
6
7
BOD Removed
Ibs/day
1,750
4,000
4,400
4,550
4,550
4,700
4,950
BP Removed
Ibs/day
I lion
4,340
9,235
10,408
15,334
17,191
17,493
17,989
Capital Cost
($)
1,326,000
2,698,000
2,959,000
3,716,000
4,053,000
4,544,100
5,307,000
& Operation
Cost ($/yr)
102,830
165,400
216,800
376,000
393,200
446,000
514,826
Herkimer
1
2
3
4
5
6
7
774
1,768
1,945
2,011
2,011
2,077
2,188
1,137
3,814
4,294
6,436
6,933
7,053
7,248
736,300
1,546,000
1,683,000
2,089,100
2,240,700
2,507,400
2,855,200
55,920
102,900
134,810
233,200
244,840
272,500
319,200
88
-------
Table 6-2 (continued)
Maintenance
Removal
Scheme*
1
2
3
4
5
6
7
BOD Removed
Ibs/day
1,303
3,166
3,399
3,585
3,585
4,051
4,283
BP Removed
Ibs/day
Little Falls
2,846
6,951
7,650
11,662
12,100
12,847
13,229
Capital Cost
(S)
1,341,620
2,695,000
2,963,800
3,769,000
4,105,000
4,607,000
5,435,000
& Operation
Cost ($/yr)
104,839
159,950
209,790
364,000
380,100
434,500
498,600
St. Johnsville
1
2
3
4
5
6
7
1,498
3,424
3,766
3,895
3,895
4,023
4,237
3,099
7,047
8,030
12,278
12,845
13,045
13,411
1,010,570
2,130,000
2,321,000
2,887,000
3,106,000
3,476,000
3,978,000
76,978
139,416
182,700
316,239
331,800
370,600
432,900
89
-------
Table 6-2 (continued)
Removal BOD Removed
Scheme* Ibs/day
BP Removed
Ibs/day
Capital'Cost
($')
*Scheme descriptions:
Scheme No.
Process
1
2
3
Maintenance
& Operation
Cost ($/yr)
1 1,807
2 4,765
3 4,931
4 5,014
5 5,014
6 5,097
7 5,139
1 2,100
2 4,800
3 5,280
4 5,460
5 5,460
6 5,640
7 5,940
Ft. Plain
4,107
9,871
10,579
15,294
16,094
16,327
16,544
Canajohaire
4,343
9,932
11,175
16,908
17,692
17,992
18,487
952,000
2,040,000
2,210,000
2,720,000
2,890,000
3,230,000
3,620,000
1,329,600
2,749,200
3,002,800
3,752,100
4,054,000
* 4,542,000
5,237,000
71,400
142,800
187,000
323,000
340,000
374,000
442-, 000
102,000
175,600
230,200
398,600
417,600
469,300
545,600
Primary treatment
Secondary treatment (primary and activated sludge)
Super secondary (above processes, and polishing
filter)
5
6
7
Above processes,
recarbonation
Above processes,
Above processes,
Above processes,
and phosphorus removal and
and nitrogen stripping
and pressure filtration
and activated carbon adsorption
90
-------
were made for concentration variance by application of the
factor, f = 5 g , derived from a general regression
200
equation for the cost of secondary treatment.
The Simulation Model
The simulation programs are designed to anticipate
possible actions of polluters and different approaches by
the regulatory authority. Several variants of the MEP
approach were examined, but all can be classified as
either one-term or staggered-term systems. The one-term
MEP system is straightforward. One permit gives the
right to discharge a fixed amount for a fixed number of
years. In these systems, all permits are good for the
same number of years. In the staggered-term systems, the
expiration date of permits is staggered so that some
permits are good for two years, some for three years, and
so on. As we have seen above, each of these two types of
systems has several rationale behind it.
In order to obtain the desired information through
the use of the simulation model without making the model
excessively complicated and expensive, simplifying assump-
tions must be made. In the case of the one-term permit
model, the assumption is that the permits are issued at
a given date, are effective for a given number of years,
and then expire. Thereafter, polluters must reduce dis-
91
-------
discharges as much as is technologically feasible, i.e.,
as much as the data in Table 6-2 indicate is possible.
This allows us to examine the effects of changing the
length of term of the permits, the subsidy rates, and
other variables without becoming ensnarled in the complex
issues of expectations and term structure. For example,
questions about the response of polluters under uncer-
tainty arise if the number and prices of effluent permits
in future time periods are unknown. While these are impor-
tant issues to consider, they are too complex to deal with
in a model the purpose of which is merely to examine the
magnitude of the effects of varying the cost and control
parameters.
In the case of the staggered-term permit systems
similar simplifying assumptions are made. All of the
permits are issued on one given date and although they
expire at different dates, no more permits are issued.
After the expiration of all permits, polluters must
reduce discharges as much as is technologically feasible.
A further simplifying assumption is that the permits
must be purchased initially in mixed blocks. For example,
if there are one, two, three, four, and five year permits,
then a polluter buys a package containing an equal number
of each term permits. Once again, this is done to avoid
the extremely difficult problems of term structure and
expectations.
92
-------
In all variants of the model the assumption of progress
toward best practical technology is made. All dischargers
are assumed not to decrease their treatment of wastes over
time. This assumption is justifiable based on the mandate
of the legislation, but is also necessary as a simplifying
assumption for our model. Without that assumption it would
be necessary to analyze the reduction in costs from reducing
treatment levels and from undertaking the attendant disin-
vestment program. This is too difficult to attempt with
the available data.
Other variations are made between different runs of the
simulation model. One variant is a constraint on the lower
level of treatment that each polluter is permitted to pro-
vide. These constraints tend to limit the demand for per-
mits and correspond to the use of quantitative effluent
standards in conjunction with the MEP system. The permit's
worth to its holder is influenced by its length of term,
the applicable discount rate, and the subsidy rates for
capital and maintenance and operation costs; all of these
factors are also allowed to vary. The pollutant to be
covered by the permits must also be specified and two
possibilities are tested: permits correspond to units
of either BOD5 (5-day biochemical oxygen demand) or biomass
potential (a weighted summarization of BOD5, and nitrogen
and phosphorous concentrations) of the wastes discharged.
93
-------
The computer program simulated the proposed system
and predicts the effect on the river basin system in terms
of the above options. The minor options enter the routine
as input variables; the cost data for each polluter (Table
6-2) are also input.
The value of a permit to a polluter is assumed to be
the marginal costs of waste treatment that are avoided by
not having to treat the wastes covered by the permit. Thus,
for the one-term permits, the discounted costs of treating
an additional unit of wastes for the number of years of
the permit's term is the value of a permit to the polluter.
Similarly, the value of the staggered-term permit is the
discounted sum of the incremental treatment cost units
that are avoided by owning the permit.
The first step in the simulation is to annualize the
capital costs over the life of the equipment:
Ac = rC/[l - (l+r)"n],
where A is the annualized capital cost ($/year), C is total
capital costs, r is the discount rate, and n the life of the
equipment. These costs can then be added to the annual
maintenance and operation costs to obtain total annual
costs:
A. = A + A ,
t c m
94
-------
where Afc and Am are respectively the annualized total and
operating costs. This must be done for each of the treat-
ment levels of the cost data. Thus, A is actually a
function, &t(x) of the amount of wastes treated, x. The
units of x are either pounds per day of BOD5 or pounds per
day of biomass potential.
The resulting stream of yearly total costs applies to
the duration of the equipment; and if one makes the con-
venient assumption that the equipment will always be
replaced by more of the same, one then has an infinite
stream of annual costs. Then, the worth of a permit of
any length is the present value of that portion of the
treatment cost expenditure stream that is avoided by
holding the permits. As stated, these calculations must
be made for each level of treatment in order to obtain
the marginal values, i.e., the worth of buying an addi-
tional permit. Suppose, for example, that the present
discharge rate of the polluter is x , and the question is
whether to purchase a permit allowing an increase in dis-
charges of one unit per day. The cost of maintaining the
XQ discharge rate is A (x ) per year, while the (lower)
cost of maintaining the discharge rate at XQ+ 1 is At(xQ + 1)
The value of the permit is thus the discounted sum of the
annual savings of A,, (x ) - A. (x +1) over the term of the
to to
permit.
95
-------
An example is useful here. Consider the cost data for
Rome in Table 6-2 on page 87. For reduction of 6,872 Ibs/day
of BP, the capital and operating costs of scheme 1 are
respectively $2,343,000 and $184,371/year. Let the
discount rate be 10 percent per year with a 25 year equip-
ment life. Then annualized capital costs are:
A , 0.1 x $2,343,000 , $258,124
C [!-(!+ O.l)"25]
Thus total annualized costs are
A. = A + A + $258,124 + $184,371 = $442,495.
t c m
Similarly, for scheme 2 and a BP reduction of 12,900 Ibs/day,
total annualized costs are $748,591. The additional cost
of the waste reduction achieved with scheme 2 is thus:
$748,591 - $442,495 = $306,096
and the average marginal costs is:
= $50.61/lb/day
Then, if the price of the permit is greater than $50.61 per
Ib/day, the discharger will use scheme 2 rather than scheme
1. Of course, if costs are subsidized the calculation of
A must be adjusted accordingly.
The above procedure yields estimates of the average
marginal costs for seven waste reduction levels. Since
cost data are used for a finite number of points on the
96
-------
treatment cost curve, an additional assumption is necessary
in order to generate continuous permit demand curves. The
assumption used in the Mohawk simulation model is that
the demand curves for permits (and the associated marginal
treatment cost curves) are piecewise linear. This allows
us to compute the demand for the permits even at those
levels of XQ for which we have no cost data, i.e., between
the orignial data points.
The above procedure results in a set of individual de-
mand schedules for permits giving the number of permits
demanded at each price. These demand schedules are then
aggregated over the entire river basin by finding, at each
price, the sum of the" individual demand levels. The aggre-
gate demand curve and the individual demand schedules are
used to predict the response of the basin to the issuance
of a given number of permits. First, the market-clearing
price for the amount issued is obtained from the aggregate
demand schedule; at this price, the (given) supply of per-
mits equals the total river basin demand. The resulting
market price and the individual demand schedules are then
used to determine individual discharger responses, the
associated costs, and the other parameters of interest in
the permit system.
-------
The Simulation Results
Tables 6-3, 6-4 and 6-5 summarize the inputs to the
simulation model for each run of the model. In all 27
different combinations of input data were used in the model
in order to provide comparisons of different MEP systems
under differing assumptions. Table 6-3 gives the relevant
input data for each of the one-term permit situations;
Table 6-4 does the same for the staggered-term model runs.
Four additional one-term runs are described in Table 6-5.
For each of the runs, the number of the run, the dis-
count rate, the subsidy rates, and the type of pollutant
are specified in lines 1 through 5. Line 6 gives the
length of term of the permit. For the one-term permit sys-
tem the same length of term applies to all of the permits;
however, for the staggered-term permits varying lengths of
term obtain. It is assumed that the staggered-term per-
mits are divided equally into five different terms, the
length of those terms varying by equal increments. Line 6
of Table 6-4 gives the longest term; dividing the longest
term by 5 gives the shortest term. Thus, for example, the
permits of run 18 are equally divided into term lengths
of 1, 2, 3, 4, and 5 years, while the permits of run 19
are divided into 2, 4, 6, 8, and 10 year term lengths.
Line 7 gives the minimum required treatment technology
for the polluters. The treatment scheme number given in
98
-------
Table 6-3
Inputs for the One-term Permit Simulations
Run Number
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Discount rate
(% per year)
Capital cost
subsidy (%)
Operating and
maintenance
cost subsidy {%)
Pollutant type
(BOD or BP)
Permit term
(years)
Lower bound on
treatment
(scheme)
10
90
30
BOD
5
2
7
0
0
BOD
25
0
1.0
90
30
BOD
5
0
10
90
30
BOD
1
2
10
90
30
BOD
10
2
10
90
30
BOD
15
2
10
75
75
BOD
5
2
20
90
30
BOD
5
2
10
90
30
BOD
5
2
10
90
30
BOD
5
2
10"
90
30
BOD
5
0
10
90
30
BP
5
2
7
0
0
BP
25
0
10
90
30
BP
5
0
10
90
30
BP
10
2
10
90
30
BP
15
2
10
90
30
BP
5
0
VD
VO
Runs 11 and 17 were made with only two cities in the system: Ft. Plain and Ilion.
Runs 9 and 10 have all eight Mohawk cities plus an additional market participant
representing the demand by environmentalists. All other runs were made with the
market comprised of the eight Mohawk cities.
-------
Table 6-4
Inputs for the Staggered-term Permit Simulations
Run Number
18 19 20 21 22 23
O
O
Discount rate
(% per year)
Capital cost
subsidy (%)
Operating and
maintenance cost
subsidy (%}
Pollutant type
(BOD or BP)
Permit term
(years)
Lower bound on
treatment
(scheme number)
10
90
30
BOD
5
2
10
90
30
BOD
10
2
10
90
30
BOD
15
2
10
90
30
BP
5
2
10
90
30
BP
10
2
10
90
30
BP
15
2
For all runs the market consists of the eight Mohawk cities
-------
Table 6-5
Inputs for Additional One-term Permit Simulations
Run Number
24 25 26 27
o
Discount rate
(% per year)
Capital cost
subsity (%)
Operating and
maintenance
cost subsidy (%)
Pollutant type
(BOD or BP)
Permit term
(years)
Lower bound on
treatment
(scheme number)
10
75
0
BOD
5
2
10
90
0
BOD
5
2
10
75
0
BP
5
2
10
90
0
BP
5
2
-------
line 7 corresponds to the treatment technologies given in
Table 6-2. Scheme 0 represents no required minimum treat-
ment, while Scheme 2 implies the use of a secondary treatment
process. In all cases the treatment level provided by the
cities is constrained to be at least the level specified
in the last column of Table 6-1.
For each of these runs the supply of permits was set
at two different levels. For the BP runs, the supply of
permits was set at 35,000 and at 70,000 pounds per day.
The supply for the BOD runs was 2,000 and 4,000 pounds per
day. For each of these supply levels, the market clearing
price and the relevant market variables were computed.
The first 11 one-term runs outlined in Table 6-3 are
simulations of BOD permit systems; the remaining 6 are BP
permit simulations. The first 3 staggered-term runs of
Table 6-4 are BOD permit simulations and the remaining 3
are BP permit simulations. They are grouped in this way
because most of the important comparisons are among com-
puter runs with the same kind of pollutant. For the four
runs of Table 6-5 the capital subsidy rate varies while the
operating subsidy is held at zero.
The input combinations for the simulation model given
in Tables 6-3, 6-4 and 6-5 are typically chosen so as to
show the results of changes in individual variables (such
as the discount rate). Run 1 of the model for BOD and
102
-------
run 12 of the model for BP most closely represent the
actual conditions in the Mohawk River Valley. Other runs
can be compared with these in order to test the sensitivity
of different variables. For example, changes in the length
of permit term are made for BOD in runs 4, 5, and 6.
The primary outputs of the model are the demand curves
for the market participants, the aggregate demand curve for
the river basin, and the market-clearing responses of
polluters (along with associated variables such as the
price of the permit). Figures 6-1 and 6-2 are examples of
the individual polluter demand curves from computer run 1.
For each price of the permit, the curves give the corre-
sponding demand for permits for Rome (Figure 6-1) and
Utica (Figure 6-2). The aggregate demand curve for run 1
is presented in Figure 6-3. Under the assumptions of the
model, this graph gives the total number of permits that
are demanded by the eight cities at each of the prices.
Given a total supply of permits, it is possible to obtain
the market-clearing price using Figure 6-3. This price
can in turn be used to determine the responses of each of
the individual dischargers.
The graphical data facilitate the comparison of differ-
ent types of MEP systems and are of interest in themselves.
More important, however, are the numerical data that are
associated with each computer run. A complete set of
103
-------
Figure 6-1
DEMAND CURVE OF ROME FOR RUN 1
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
o
DEMflND FOR 5 YR EFFLUENT PERMITS
PGLLUTER=ROME
POLLUTflNT=BOD
RUN NO. 1
50.00 100.00 150.00
DEMflND, LBS/DflY
200.00
*10l
250.00 300.00
104
-------
Figure 6-2
DEMAND CURVE OF UTICA FOR RUN 1
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
OEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=UTICfl
POLLUTflNT=BOD
RUN NO. 1
10.00 20.00 30.00 40.00
DEMflND, LBS/DflY *102
50.00
60.00
105
-------
Figure 6-3
AGGREGATE DEMAND FOR EFFLUENT PERMITS
O
o
flGGREGflTE DEMflND FOR EFFLUENT PERMITS
NO. OF POLLUTERS=8
POLLUTflNT=BOO
RUN NO. 1
oo
40.00 80.00 120.00 160.00
DEMflND, LBS/DflY *102
200.00 240.00
10:
-------
numerical data is available giving the aggregate demand curve
and the market-clearing responses of polluters for each of the
computer runs. Tables 6-6, 6-7, and 6-8 are used here to
illustrate the form of these data. They are taken from
computer run 1. Table 6-6 gives the nodes on the aggregate
permit demand curve for the river basin. Demand is assumed
to vary linearly between the nodes. Thus the number of permits
demanded when the price is 0.0 is 13,624 while the demand at
$100-00 per permit is 13,176.
Tables 6-7 and 6-8 give the market-clearing responses
of the dischargers when the supply of permits is fixed at
4000 and 2000 pounds per day of BOD, respectively. Thus,
Table 6-7 contains the price of a permit, the amount dis-
chargers spend on permits and the number of permits they
buy, the amount dischargers spend on waste treatment and the
amount of wastes they discharge, and the associated totals
under the assumption of a 4,000 pound per day supply of per-
mits. Table 6-8 contains the same data under the assumption
of a 2,000 pound per day supply. Both the total and the
annualized (based on the discount rates in Table 6-3) cost
figures are given. The annualized figures are given below
the total cost figures.
An example can help to elucidate Table 6-7. The
beginning lines of the table give the number of permits
issued and the length of their term. The effluent permits
107
-------
Table 6-6
AGGREGATE DEMAND SCHEDULE FCR RUN 1 OF THE MCHAWK PERMIT SYSTEM SIMULATION
PRICE OF PERMIT
o
oo
o
53
1X95
2?2
230
246
253
323
359
368
3 c 9
423
435
510
537
615
740
749
799
860
.90
. 66
.45
.14
.59
.06
.90
.16
.?3
.70
.36
.45
.71
.87
.78
.76
.31
.73
.67
13624
12912
11741
11612
11545
1 1414
11245
10391
10C51
9937
9881
9734
9410
9188
8952
8127
6776
6684
6158
5345
S/DAY
.00
.00
.36
.ee
.30
.00
.80
.33
.14
.00
.92
.34
.81
.ec
.79
.31
.23
.38
PRICE
OF PERMIT
880.07
83
68
19
06
62
27
957
933
992
996
1167
1222
1362.84
1409.44
1556.50
1616
1952
1997
2155
2214
224C.1C
3067.10
3245.83
3964.91
4633.98
5403.06
14
21
,57
,ie
,97
DEMAND,LB
5176
4195
3E61
3752
•37CG
2640
2433
2216
2141
1SC3
1807
1265
1220
1058
1C21
1005
647
838
733
712
691
S/DAY
.42
.71
.94
.03
.65
.16
.66
.13
.01
.90
.75
.94
.39
.79
.01
.13
.02
.33
.CC
.00
.00
-------
Table 6-7
RESPONSES OF BIDDERS FOR RUN 1 OF THE MGHAfcK PERMIT SYSTEM SIMULATION
NUMBER ISSUFO= 4000. TERM* 5 YRS UNIT=L3S/OAY BOO
MARKET CLEARING ^PTCE=$ 972.99
o
vo
POLLUTtP
ILITN1
FT PLAIN
CANAJOHA° IE
HERK IMER
LITTLE FALLS
RQMC
ST JCI-NSVILLE
UTICA
TOTALS
TL ION
FT "LA IN
CAMAJOHARIE
HERKII»F.R
LITTLE FALLS
ROME
ST jnt-NSVILLE
UTICA
TOTALS
PERMITS PCUGHT
L3S/DAY
601.92
277.22
655 .35
295.25
514.69
696. 19
503 .04
451.25
40CO.CO
LBS/OAY
601.92
277. 22
655.26
295.35
514.69
696. 19
503 ,C4
451. 25
4000.00
CCST
$
585657.19
269126.28
637656.75
237267.44
500783.69
677381.00
494213. 94
439C56. 19
389194C.CO
$ /YR
154495.88
71153.56
168213.31
756C7. 25
1321C6.21
178692.56
130299.63
115822.63
1C2669-0.69
TREATMENT
LBS/OAY
4398.08
4902.78
5344.64
1914.65
3815.31
7093.81
3771.96
28378.75
59619.98
LBS/CAY
4398. C8
4902.78
5344.64
1914.65
3815.31
7C92.81
2771.96
28378.75
59619.98
CCST
$
696975.63
546596.56
795701.25
54954.41
1049460.00
1223471. OC
587485.31
2944244.00
7898987.00
f/YR
183861.56
144191.69
2C9905.31
14496.93
276846.69
322750.63
154978.13
776715.56
2083146. CC
TOTAL COST
$
1232632.00
816322.94
1433358;.OQ
3*2321.81
1550243.00
1900852.OC
1081799.00
3383400.00
11790927.00
f/YR
338357.44
215345.25
378118.63
90304.13
408953.00
501443.19
285377.75
892538.19
3110436.00
TOTAL NATIONAL INCOME COST= 1 5 144286 . cfc/YR
-------
Table 6-8
RESPONSES OF BIDDERS FOR RUN 1 OF THE MCHAyvK PERMT SYSTEM SIMULATION
NUMBER ISSUED= ?000. TERM = 5 YRS UNIT=L8S/DAY BCD
MARKET CLEARING PR 1CF=$ 1496.SO
POLLUTER
TL ICN
FT PLAIN
CANAJHHAPIE
HE»KIMFR
LITTLE FALLS
ROME-
ST JGHMSVILLF
UTICA
TOTALS
ILIGN
<=T PLAIN
CANAJCHARIE
hEPK IMF. P
LITTLE FALLS
ST JCHNSVILLE
UTK.A '
TOTALS
PERMITS PCUGHT
LBS/DAY
177 .c/
262,
336
245,
47,
140
301
56
79
,62
, 89
,CO
,00
?88.00
2000.CO
LRS/CAY
377
262,
336
245,
47
140,
301
,56
79
,P2
69
,CO
CO
C K
283
2000
CO
CO
CCST
$
565162.06
393266. 31
504192.00
368C65.69
70254. 19
209565.75
451984.00
431 106.75
TREATMENT
LBS/DAY
4622.44
4917.21
5663. 17
1964. 11
4283.00
7650.00
3978.05
28542. CO
CCST
$
975697.88
564415.25
1189C71.0C
117727.00
1550027.00
1833961.00
841996.44
31C5C67.CO
2993 794. CO
61619.99
10177962.00
S/YR
149C39. 25
103769.69
133C05.44
97C95. 28
18559. 38
55233.28
•119233.00
113725. 56
789760.44
LBS/DAY
4622.44
4917.21
5663. 17
1964.11
42E3.CO
7650.00
3978. C5
28542. CO
61619.99
$/YR
257288.31
148692.25
313£75.S4
31056.29
408895.88
483797.44
222117.94
819114.19
2684938.00
TOTAL COST
$
1540859.00
957781.56
1693263
485792.
1620381
2043526
1293980
00
69
00
CO
00
3536173.00
12171755. CC
$/YR
406477.
252661.
446681.
128151,
427455,
539080.
341350,
932839,
56
94
38
63
25
69
94
75
3474698.00
TOTAL NATIONAL INCOME COST=i 6449094.00/YR
-------
are BOD permits, and the market-clearing price of the permits
(the price at which the total demand for permits is 2000)
is $972.99. Thus each permit costs $972.99.
Column 1 of Table 6-7 lists the names of the eight
municipalities twice. The top list refers to the data in the
top half of the table. These data are the permit, discharge,
and total cost amounts corresponding to run 1 of the model.
For example, in simulation run 1 columns 2 and 3 indicate
that Utica buys 451.25 effluent permits at a total cost of
$439,056 (which, to four significant figures, equals $972.99
x 451.25). Column 4 shows the total effluent reduction of
Utica is 28378.75 pounds of BOD per day. Total treatment
costs for Utica are $2,944,344 and are given in column 5
of Table 6-7. The total costs that are borne by Utica are
the treatment costs plus the cost of buying the permits.
These are equal to $3,383,400 and are given in column 6.
The bottom half of Table 6-6 gives the same information
as the top half with one important difference: the cost data
are annualized figures rather than total amounts. Thus, the
cost of permits for Utica is given in column 2 as $115,822.63
per year. This is the five-year annuity that $439,056 will
purchase at an interest rate of 10 percent per year. Simi-
larly, the lower half of Table 6-6 gives Utica's annualized
treatment and annualized total costs as $776,715.56 per year
and $892,538.19 per year respectively. These are given in
column 5 and 6. (It should be noted that the data given in
111
-------
Table 6-7 and in all such tables in the text and in the
appendices are accurate to, at most, four significant
figures.)
The final line of Table 6-7 gives the total national
income cost for run 1. This is the sum for all municipal-
ities of the annualized value (at a discount rate of 7 per-
cent per year) of unsubsidized treatment costs.
In this section, the computer runs are discussed and
comparisons made among them. However, except for Tables 6-5,
6-7 and 6-8, only summary data are presented in this section.
Most of the data from the computer runs are relegated to
Appendix A. Appendix A contains the aggregate demand numbers
and the response data for each of the 27 computer runs. For
7 of those runs, there are also graphical demand curves given
in Appendix A.
Table 6-9 provides a summary of the computer runs. That
table contains the market-clearing price, annualized treatment
and permit costs, annualized total costs, and annualized
national income costs for each of the computer runs at both
permit supply amounts. National income costs are defined as
the present value of the total unsubsidized treatment costs
associated with each permit program. The discount rate for
national income costs is taken to be 7 percent per year;
the cost of the permits and the reduction in costs due to
112
-------
I--
CO
Table 6-9
Summary Information for the Mohawk Effluent Permit System Simulation
Total Subsidized
Total Permit
Total Costs
Total
Unsubsidized
Run
No.
1
2
3
4
5
6
7
8
9
10
11
18
19
20
24
25
Permit
Supply
(Ibs.)
4,000 BOD
4,000 BOD
4,000 BOD
4,000 BOD
4,000 BOD
4,000 BOD
4,000 BOD
4,000 BOD
4,000 BOD
4,000 BOD
1,000 BOD
4,000 BOD
4,000 BOD
4,000 BOD
4,000 BOD
4,000 BOX
Market Treatment Costs to
Price Dischargers
($) ($1000's/year)
973
6,885
973
233
1,577
1,952
641
863
989
1,096
566
600
1,020
1,317
1,546
1,327
2,084
5,113
2,084
2,084
2,084
2,084
1,461
2,364
2,136
2,332
306
1,813
1,845
1,874
3,337
2,823
Costs to
Dischargers
($1000's/year)
1,027
2,363
1,027
1,027
1,027
1,027
677
1,154
1,043
1,155
149
633
664
693
1,631
1,400
to
Dischargers
($1000's/year)
3,110
7,477
3,110
3,110
3,110
3,110
2,138
3,519
3,179
3,497
455
2,446
2,509
2,567
4,968
4,233
National
Income Costs
($1000's/year)
5,144
5,114
5,144
5,144
5,144
5,144
5,114
5,134
5,269
5,701
787
4,306
4,384
4,449
5,135
5,149
-------
Table 6-9 (continued)
Total Subsidized
Total
Total Permit
Run
No.
1
2
3
4
5
6
7
8
9
10
11
18
19
20
24
25
Permit
Supply
(Ibs.)
2, 000 BOD
2,000 BOD
2,000 BOD
2,000 BOD
2,000 BOD
2,000 BOD
2,000 BOD
2, 000 BOD
2,000 BOD
2,000 BOD
500 BOD
2,000 BOD
2,000 BOD
2,000 BOD
2,000
2,000 BOD
Market Treatment Costs to
Price Dischargers
(§) ($1000's/year)
1,497
9,485
1,497
359
2,426
3,003
854
1,279
1,576
1,837
1,797
799
1,396
1,861
2,298
2,075
2,685
6,448
2,685
2,685
2,685
2,685
1,839
3,028
2,736
2,926
467
2,186
2,241
2,291
4,276
3,660
Costs to
Dischargers
($1000's/year)
790
1,628
790
790
790
790
450
855
831
967
237
422
454
489
1,212
1,095
to
Dischargers
($1000's/year)
3,475
8,076
3,475
3,475
3,475
3,475
2,289
3,883
3,568
3,893
704
2,607
2,695
2,780
5,488
4,754
National
Income Costs
($1000's/year)
6,449
6,448
6,449
6,449
6,449
6,449
6,448
6,449
6,555
6,948
1,119
5,066
5,174
5,277
6,449
6,449
-------
Table 6-9 (continued)
Total Subsidized
Total Permit
Total Costs
Total
Unsubsidized
Run
No.
12
13
14
15
16
17
21
22
23
26
27
Permit
Supply
(Ibs.)
35,000 BP
35,000 BP
35,000 BP
35,000 BP
35,000 BP
5,500 BP
35,000 BP
35,000 BP
35,000 BP
35,000 BP
35,000 BP
Market
Price
{$)
105
683
105
170
211
85
74
121
156
144
129
Treatment Costs to
Dischargers
($1 OOP's/year)
2,171
5,023
2,171
2,171
2,171
506
1,635
1,695
1,751
3,438
2,966
Costs to
Dischargers
($1000's/year)
970
2,053
970
970
970
123
681
692
716
1,328
1,196
to
Dischargers
($1000's/year)
3,141
7,076
3,141
3,141
3,141
629
2,316
2,387
2,466
4,766
4,162
National
Income Costs
($1000's/year)
5,040
5,023
5,040
5,040
5,040
1,207
3,808
3,904
4,005
5,044
5,074
-------
Table 6-9 (continued)
Total Subsidized
Total Permit
Total Costs
Total
Unsubsidized
Permit
Run
No.
12
13
14
15
16
17
21
22
23
26
27
Supply
(Ibs.)
70,000
70,000
70,000
70,000
70,000
11,000
70,000
70,000
70,000
70,000
70,000
BP
BP
BP
BP
BP
BP
BP
BP
BP
BP
BP
Market Treatment Costs to
Price
(?)
80
510
81
129
160
77
58
97
125
113
105
Dischargers
($1000's/year)
1,
3,
1,
1,
1,
1,
1,
1,
2,
1,
360
331
347
360
360
389
047
077
106
248
895
Costs to
Dischargers
($1000's/year)
1
3
1
1
1
1
1
1
2
1
,469
,062
,505
,469
,469
225
,072
,108
,154
,087
,948
to
Dischargers
($1000's/year)
2
6
2
2
2
2
2
2
4
3
,829
,393
,852
,829
,829
614
,119
,185
,260
,336
,843
National
Income Costs
($1000's/year)
3
3
3
3
3
2
2
2
3
3
,581
,331
,505
,581
,581
974
,471
,523
,586
,462
,508
-------
subsidies are not included in national income costs since
they represent a transfer of funds rather than the expendi-
ture of real resources. The annualized national income
costs, A, are determined by the standard formula:
A = Tr/[l-(l+r)~n]
where r is the discount rate (= .07 per year), T is the total
present value of treatment costs, and n is the number of years
of the permit term. It should be stressed that because of
the assumptions regarding the responses of polluters (piece-
wise linear demand curves) and the costs incurred by them,
the computer results provide only approximations to the
responses that would actually be made by cost-minimizing dis-
chargers. Additionally, the uncertainties of the quantities
of future permit issues and of their prices are neglected.
In spite of these simplifying assumptions, the output
of the simulation model is helpful in assessing the general
characteristics of the effluent permit system. In order to
facilitate the comparison among different runs of the simu-
lation model, the cost data have been transformed into annual
terms. Runs 1 and 2 provide standards of comparison for the
remainder of the BOD simulations. Run 1 represents the con-
ditions that hold in the Mohawk in terms of the present
subsidy rates and the lower bound on treatment schemes. A
90% capital cost subsidy is provided—75% from the federal
117
-------
government and 15% from New York State—and a 30% operating
cost subsidy is provided by New York State. Run 1 is made
for 5-year permits.
Run 2 is of interest because it provides an approxima-
tion to the least-cost (in terms of national income costs at
a 7% discount rate) system of waste treatment. The cost
figures for run 2 are considerably greater than those for
run 1 because they are computed with a zero subsidy level
and a 7% discount rate in accord with the definition of national
income costs given above.
The important figure for comparison that run 2 provides
is the least-cost figure for national income costs. This run
equates the marginal national income costs of different pol-
luters subject to the restriction on the total waste dis-
charges. Thus the result is the least-cost treatment config-
uration and a permit price that represents the "shadow price"
of the effluent discharge constraint. That is, in run 2 the
price of the permit represents the increase in national income
costs necessary to achieve the reduction of an additional
pound of effluent when that effluent is reduced in the least-
cost manner. The associated treatment configuration is of
interest as a standard of efficiency. Run 2 can be compared
with run 1 and runs 3 through 10. Since runs 11, 18, 19
and 20 involve different permit supply levels, they are not
comparable to runs 1 and 2.
118
-------
Runs 12 and 13 are the corresponding computer simulations
for BP. Thus, they provide a standard for comparison with
the other BP simulations. Run 12 represents the present
Mohawk conditions in terms of subsidy rates and the lower
bounds on treatment schemes. Run 13 is the least-cost solu-
tion in national income terms. Runs 12 and 13 can be com-
pared with runs 14, 15 and 16.
The most striking thing to note about the computer results
is the national income cost column. The permit systems, by
and large, provide for waste treatment at a cost level that
is less than one-half of 1% greater than the least-cost
method. This attests to the relative efficiency of the permit
system as a water pollution control tool. In fact, run 7 closely
approximates the least-cost method.
There are other factors to note. First, permit costs are
significant: they are often the same order of magnitude as
treatment costs. That is, polluters must often pay almost
as much for effluent permits as they do for treatment of wastes.
The unit permit costs is also high; in almost all cases, it
exceeds $100.
The primary differences among the unit cost of the per-
mits for different computer runs are accounted for by the
difference in the length of the permit term. A 5-year per-
mit naturally costs less than a 10-year permit. Indeed, the
only difference among computer runs 1 and 3 through 8 is the
119
-------
permit price. Responses in terms of treatment and the number
of permits purchased remain the same due to the assumptions
regarding the cost functions.
In spite of the high permit costs, the system need not
be excessively expensive for dischargers. Above, two methods
for alleviating the cost burden are suggested. First, an
initial allocation of permits can be made with a subsequent
auction and market. Second, the costs of permits can be
subsidized in the same manner as the costs of treatment. The
latter course of action improves the efficiency properties of
the system by assuring the desired equality of marginal treat-
ment costs among polluters.
At present there is a discrepancy between subsidies for
capital and operating costs. This leads to a distortion in
the capital/operations expenditure mix and a consequent loss
in efficiency. Run 7 was designed to test the magnitude of
that distortion. In that run the capital and operating sub-
sidies are both 75%. The results show that equalization of
the two subsidy levels does lead to some efficiency gains—
the resulting treatment configuration is a closer approxi-
mation to the least-cost system. The gains are not, however,
significant: national income costs are reduced only 0.6
percent.
The approximation of run 7 to the treatment configuration
of the least-cost method is better than that of run 1. In
120
-------
run 1, even though the national income costs are close to the
least-cost method, in some respects the distribution of treat-
ment duties differs significantly from run 1. In fact, Utica
buys less than half as many permits in run 1 as in run 2.
This does not result in significantly higher national income
costs, but it does affect the distribution of costs among
polluters.
The striking uniformity of the national income costs is
not surprising in view of (a) the nature of the pollution con-
trol costs used in these examples, and (b) the high minimum
levels of waste reduction required of all polluters. The
pollution control costs are all based on waste treatment
only and on existing technology for waste treatment. In
cases where other control methods such as process modifica-
tion are admitted, a permit program will allow additional
national efficiency savings to be achieved. Similarly a
permits program would allow efficiency savings to be cap-
tured in the future through the use of advanced treatment
technologies.
The constraint that all polluters must achieve a level
of waste reduction equivalent to secondary waste treatment
markedly limits the efficiency savings that can be achieved
by a permit system (or any control mechanism) since it limits
the degree to which differential treatment costs can be
avoided. Beyond the secondary waste removal range (tertiary
121
-------
treatment levels), the marginal treatment costs to the differ-
ent polluters in the case examined do not differ markedly.
This is a result of the relatively small economies of scale
exhibited by tertiary treatment as opposed to primary and sec-
ondary treatment.*
Hence, at the high minimum level of waste reduction called
for in this model, total costs are simply not significantly
affected by the model's reallocations of waste treatment among
dischargers. This fact mitigates the efficiency advantages of
the effluent permit method, and must be considered in evaluat-
ing this pollution control method. Relaxing the constraint to
require lower minimum treatment levels would, of course, allow
additional efficiency gains under a permits method.
The bidding for effluent permits need not be limited to
dischargers. An environmental action group, for instance,
might wish to purchase permits in order to keep them off the
market and thereby improve water quality. This option is
discussed in Section 2; runs 9 and 10 of the simulation model
were made including such a market participant (the hypothet-
ical "Society to Clean Up the Mohawk"). The assumption was
made that the associated demand schedule is dictated by the
*These relative scale economies are presented in Appendix B,
122
-------
sum of money available for the purchase of permits. Stated
differently, the elasticity of demand for permits is assumed
to equal 1 for this market participant. Thus, if $100,000
is available for buying permits, 1,000 are demanded if the
price is $100 per permit, 500 are demanded if the price is
$200, etc. Run 9 is made assuming that the environmental
group has $200,000 available for the purchase of permits and
$1,000,000 is assumed available in run 10. The effect of
the added demand on the market can be seen by comparing runs
9 and 10 with run 1.
The increase in demand for permits resulting from the
addition of the environmental group drives the price of
permits up. The national income costs increase because the
environmental group has withdrawn some permits from the mar-
ket. Although the national income costs are higher, this
situation is not necessarily inferior to the ones represented
in the other computer runs. In runs 9 and 10 the costs are
higher, but the water quality is also better. Total dis-
charges are decreased from 5 to over 25%. There seems little
reason to deny this group participation in the MEP market.
Its rights should be equal to those of a polluter and market
participation by such a group can help to mitigate the poten-
tial problems of market manipulation. Further, if the permits
are of greater value to the polluter than to the environmen-
talist, the polluter can buy them back.
123
-------
Simulations of Market Manipulating
The simulations thus far described are made assuming that
each polluter is a price-taker who disregards (or is unaware
of) the demand schedules of others and disregards its own
effect on the price. In light of the fact that some of the
anticipated problems of the MEP system are related to the
possibility of manipulating the market, it is interesting to
explore the consequences of assuming that one of the Mohawk
dischargers is a price-maker, rather than a price-taker. The
primary motivation of the price-maker is still assumed to be
an interest in minimizing costs. However, unlike a price-taker
the price-maker realizes that the amount that he demands affects
the ultimate price of the permits in the market. For the mar-
ket simulations the price-maker is assumed to know the aggre-
gate demand curve of the other dischargers. Thus, the other
dischargers act as price-takers and the price-maker knows
their demand schedules. The price-maker takes advantage of
this information by submitting bids for permits in a manner
that results in the price/quantity combination that minimizes
the price-maker's costs.
This approach is slightly different from the textbook
duopoly solutions because of the fixed-supply character of the
MEP system. Since the supply of permits is fixed by the
regulatory authority, the price-maker cannot manipulate the
total market-clearing quantity. Instead he can affect only
124
-------
the price and his share of the total quantity. At any given
price the price-takers demand a certain quantity of permits
depending on their treatment cost schedules; the price-maker
assumes that he must purchase the remaining permits at that
price. He thus strives to fix the price at the point most
advantageous to him, the one that results in the best possi-
ble price/quantity combination under the given circumstances.
In the extreme case of the monopsonist—a single price-
taker with no other market participants—an ongoing market
is, of course, not a possibility. If the regulatory authority
attempts to institute a competitive bidding process, the
monopsonist will end up with all of the available permits
at (almost) zero price. (As Rose points out, this will not
be true if the supply schedule of permits has elasticity
greater than zero, i.e., if the supply of permits is not
fixed at a prespecified level.) Consequently the MEP system,
like any market, makes little sense if there is only one
participant.
Two price-making situations are examined using the Mohawk
data. In the first, Utica is assumed to be the price-maker
while all other cities are assumed to be price-takers. The
situation for both BOD permits and BP permits is simulated.
These simulations correspond (in terms of the basic input
data) to computer runs 3 and 14. Price-making responses were
computed with BOD and BP permit supplies at 2,000 and 35,000
pounds per day respectively.
125
-------
The results of the simulations indicate that the effect
of Utica's behavior is minimal. A comparison with the responses
of computer run 3 with the price-making results reveals that
in the case of the BOD permits, the outcome is the same
whether Utica acts as a price-taker or as a price-maker. There
is no measurable difference in the price of the response of
dischargers; Utica's price-fixing power is effectively nil.
This is due to the shape of the treatment cost functions and
the fixed supply of permits. If Utica tries to lower the
price of the permits, then that city's share of the permits
drops so much that the savings realized from the lower permit
price are washed out by the higher treatment costs. Similarly,
an increase in the permit price does not provide Utica with
enough extra permits to make that course of action profitable.
Utica does gain slightly in the BP permit situation. A
comparison of the price-making responses with the responses
of computer run 14 is given in Table 6-10. The values in that
table represent the differences in responses between the
price-taking and price-making situations. Thus, for example,
the permit price is $5 lower and Utica's total costs (column 6)
are $44,000 lower in the price-making situation than in the
competitive situation. The numbers of Table 6-10 are small
relative to the total figures and it appears that Utica does
not carry much weight as a potential price-maker. The effect
on the national income costs of pollution control is
126
-------
Table 6-10
Difference Between the Results with Utica as
Price-Maker and the Results of the
Competitive Solution (Run 14)
Permit price difference = $5
Total Cost Differences
Polluter
Fort Plain
Ilion
Canajoharie
Herkimer
Little Falls
Rome
St. Johnsville
Utica
TOTAL
Permits
Bought
(Ibs. BP)
17
12
14
83
274
92
9
503
Cost
($1000's)
-7
-10
-11
-3
-11
-24
-8
-104
-177
Treatment
(Ibs. BP)
17
12
14
83
274
92
4
-503
Cost
($1000's)
-2
-1
-1
-9
-28
-9
-1
60
Total Cost
($1000*5)
-9
-11
-12
-11
-39
-33
-9
-44.
-168
Annualized Cost Differences ($100's/year)
Polluter
Port Plain
Ilion
Canajoharie
Herkimer
Little Falls
Rome
St. Johnsville
Utica
TOTAL
Permit
Cost
-19
-27
-28
-7
-28
-62
-20
-272
-462
Treatment
Cost
— 3
-1
-2
-22
-72
-22
-1
163
-388
Total
Cost
-22
-28
-30
-29
-100
-84
-21
-109
-423
National
Income
Cost
-72
-60
-68
-44
-195
-110
16
532
84
127
-------
negligible. They are increased by $9,000—less than one-
fifth of 1%—due to the price-making activity of Utica.
The second price-making simulation was made with only
two polluters in the system: Fort Plain and Ilion. This
was a test to determine whether the effects of price-making
are greatly increased with fewer market participants. The
results for the BOD permits are given in Table 6-11. The
first part of the table gives the responses when Fort Plain
is the price-maker and Ilion is the price-taker. The opposite
situation is given in the second part of the table. Table
6-12 is taken from computer run 11 with both Fort Plain and
Ilion as price-takers.
The effects of price-making are significant in this two-
participant situation. The price of the permit varies from
$749 to $1,797; consequently, the use of the price as a signal
for resource allocation is severely distorted. The variances
in treatment levels and treatment costs, although not as
great as the variance in permit price, are significant. The
variance in total costs is great, and provides a great incen-
tive for price manipulation. The national income costs for
the three situations depicted in Table 6-11 and Table 6-12
do not vary as much.
These results seem to confirm the earlier conclusions
with regard to the problems of market size. The dangers of
128
-------
Table 6-11
Ilion and Fort Plain as Price-Makers
500 BOD issued
Response with Ilion as Price-Maker
Price = $749.31
Permits
Ilion
Fort Plain
Annualized
Costs
Ilion
Fort Plain
Response with
217
283
500
Permits
42,789
55,804
98,593
Fort Plain
Cost Treatment Cost Total
162,600 4,783 1,245
212,055 4,897 541
374,655 9,680 1,787
Treatment Total
327,891 370,680
142,446 198,250
470,337 568,930
as Price-Maker
,988 1,408,588
,295 753,350
,283 2,161,938
National Income
763,616
351,923
1,115,539
Price = $1,745.00
Ilion
Fort Plain
Annualized
Costs
Ilion
Fort Plain
Permits
268
232
500
Permits
123,068
106,537
229,605
Cost Treatment Cost Total
467,660 4,732 1,153
404,840 4,948 625
872,500 9,680 1,778
Treatment Total
303,498 426,566
146,589 271.126
468,087n 697,692
,293 1,620,953
,438 1,030,278
,731 2,651,231
National Income
718,669
395,956
1,114,625
129
-------
Table 6-12
RESPONSES OF 3IDDERS FOR RUN 11 OF THE MCHAWK PERNIT SYSTEM SIMULATION
Nyvmcp ISSUED 530. TFPM= 5 YRS UNIT=LBS/DAY BOD
MARKET,CLEANING PP 1CE=$ 1796.£ 0
POILUTFR
I LICN
FT PLAIN
wTOTALS
IL I CM
FT PL&IN
TOTALS
IITS FCUGHT
LRS/CAY
245.47
254. 53
5CO.CO
LPS/TAY
245 .47
254. 53
500. CO
CCST
$
441CQ4.CO
457296.81
69B2CO. 81
J/YR
116226.50
120634.50
226S71.CO
TREATMENT
LBS/CAY
4754.53
4925.46
9630.00
LBS/CAY
4754,. 53
4925.46
<568C.OO
CCST
t
1193214.00
576CG6.69
1771220.00
f/YP
314768.88
152477.69
467246.38
TOTAL COST
$
1634218.00
1035303.50
2669521.00
$/YR
431105.38
273112. 19
704217.38
TOTAL NATIONAL
CCST=J 1116521. CC/YR
-------
market distortions and manipulations are greater with few
numbers of market participants. It is encouraging to note,
however, that with the eight cities of the Mohawk there appears
to be little danger of price manipulation by a single polluter.
This in spite of the fact that Utica's waste load (in pounds
of BOD) comprises a significant percentage of the total river
basin load.
A Comparison with Effluent Charges
In the report, "Effluent Charges: Is the Price Right?",
the Mohawk data were used to examine the characteristics of
an effluent charge system. Some of the results of the model
used in the effluent charge report are presented here in
order to facilitate a comparison between the effluent charge
and the MEP systems. Table 6-13 summarizes the results for
both control systems when the pollutant is BP and the total
allowable river basin load is 102,300 Ibs/day. (This is the
case reported on page 103 of "Effluent Charges: Is the Price
Right?") In the effluent charge model the discount rate is
6 percent per year. The same rate was used to generate the
effluent permit results given in Table 6-13.
From the examination of Table 6-13, it can be seen that
the distribution of treatment duties among polluters is simi-
lar. In fact, the primary difference is the results arises
due to the nature of response to the effluent charge. The
131
-------
Table 6-13
The MEP Simulation vs. the Effluent Charge (EC) Model
Fraction of BP Discharged
BP Removed to River
MEP EC MEP EC
Ft. Plain
I lion
Canajoharie
Herkimer
Little Falls
Rome
St. Johnsville
Utica
Total Discharges
.571
.485
.508
.586
.476
.416
.496
.627
.572
.488
.505
.495
.476
.419
.500
.700
7,418
9,813
9,627
3,197
7,667
18,132
7,164
39,282
102,300
7,400
9,753
9,682
3,895
7,659
18,041
7,106
31,615
95,150
Notes: Results of effluent charge model are for a single
river basin charge of 3£ per Ib. Discount rate is
6 percent per year. Subsidy rates are 90 percent
and 30 percent for capital and O&M costs respectively.
Term of permits is 5 years.
132
-------
response to the effluent charge is difficult to control
precisely—thus the total discharge is 95,150 Ibs/day
even though the target amount is 102,300 Ibs/day. Most
of this difference comes at Utica.
The most important point of comparison between the MEP
and the effluent charge systems is the total national income
costs. The total cost for the MEP system is $4,270,000 per
year while the total cost for the effluent charge system is
$4,405,000 per year. In part, the lower costs of the MEP
systems are due to the difference in total discharges that
resulted in the two model runs.
The comparison between treatment levels and costs shows
that the MEP and effluent charge results are similar. The
efficiency gains of the MEP system are important, but per-
haps not so important as the lack of uncertainty in the
administration of the MEP system. If compliance to a MEP
system is secured, then the total river basin discharges will
not exceed the number of permits issued. In contrast, the
response to the effluent charge is uncertain—a charge level
may result in less than the anticipated waste treatment.
133
-------
NOTES
The choice was influenced by the availability of data.
Meta Systems Inc used the Mohawk Valley for a case study
on effluent charges for the Environmental Protection Agency.
Appendices A and D to "Effluent Charges: Is the Price
Right?" (Meta Systems Inc, Cambridge, 1973) detail many
of the data used in this section of the permit study.
2 See "Effluent Charges: Is the Price Right?", Tables B-l,
B-2 and B-3.
3 See "Effluent Charges: Is the Price Right?11, Table B-8.
4
See "Effluent Charges: Is the Price Right?11, Appendix D,
pp. D-41 through D-45, for derivations of the scaling factors.
See Section 2 of this report.
BP = 1.47 BOD5 + 4.57N + 30 P , where N = total fixed
nitrogen concentration, P. = total phosphorus concentration.
See "Effluent Charges: Is the Price Right?", Appendix D,
pp. D-45 through D-46 for justification.
See Marshall Rose, "Market Problems in the Distribution of
Emission Rights" in Water Resources Research, Vol. 9, No. 5,
(October, 1973), pp. 1132-1144 for an examination of the
possibilities of market manipulation in the distribution of
emission rights. Unlike the case presented here, Rose deals
primarily with regulatory authority that has a damage function
and seeks to arrive at the optimal quantity and price of the
permits.
134
-------
Section 7
Legal and Administrative Issues
In this section the legal and administrative issues
surrounding the use of a marketable effluent permit system
are discussed. These issues include the constitutional and
tax aspects of a MEP system, as well as the best course to
pursue with regard to enabling legislation and administration.
The relation o,f the National Pollutant Discharge Elimination
System to the MEP system, and the probable administrative
costs of the MEP system are discussed here.
The Constitutional Basis of the MEP System
Supplementary legislation would be necessary to authorize
a MEP system, but it need not represent a departure from the
basic approach of the 1972 Amendments nor from the set of
expectations the Act has set in motion. Like other federal
legislation in the field of water quality control, Congress
could enact a MEP system in the exercise of its powers under
the Commerce Clause to regulate the use of navigable waterways.
The validity of such regulation is too well established to
warrant lengthy discussion here. Congress could, if it wished,
go so far as to require the elimination of all discharges to
public waters, and has in fact stated this as the national
goal of the 1972 Amendments.
But suppose an existing discharger had to close shop
because he Could not afford a sufficient number of marketable
135
-------
effluent permits sold at auction. Could he successfully
sue to enjoin the MEP system on the ground that, as applied
to him, it was in effect an unconstitutional "taking" of his
property without compensation, in violation of due process
rights guaranteed to him under the Fifth Amendment? Could he
also claim that his right to equal protection of the laws,
also embodied in the Fifth Amendment, had been abridged by a
scheme that required him to yield his place on the stream to
another who could better afford the price of discharge per-
mits in an artificially created market? For reasons summarized
below, both questions are answerable in the negative.
In general, the line between valid regulation of property
uses for the protection of the public health or welfare (nui-
sance abatement, zoning, conservation), and compensable takings
2
has been a difficult one to draw. In the opinion of one
expert, it remains "the conventional view that any governmen-
tal regulation that makes a private right essentially worthless
3
is a taking of property for which compensation must be paid.
Thus, "[i]f the effect of prohibiting strip mining were to
make the mining land utterly worthless to the holder, who
might own only coal mining rights, most courts today would
award compensation to him." The opposing line of reasoning
and precedent holds that any use of property in such a way
as to impair legitimate competing uses or to injure the healthi
safety or welfare of others "may constitutionally be restrained,
136
-------
however severe the economic loss on the property owner,
without any compensation being required; for each of the
competing interests that would be adversely affected by such
uses has, a priori, an equal right to be free of such burdens."5
It is unnecessary, however, to puruse at length here the
obscure boundaries between regulation of property and eminent
domain. For the only activity a MEP system prohibits is the
free discharge of wastes to public waterways, and the use of
such waterways by private persons or public agencies for any
purpose has always been recognized —- unlike other property
interests — as a mere privilege subject to the so-called
"navigational servitude" in favor of the United States under
the Commerce Clause. Nobody can assert a property interest
7
in navigable waters as against the United States; "they are
8
the public property of the nation." In consequence, Congress
may, for valid regulatory purposes, impair or even destory any
person's access to navigable waters without having to compen-
sate him for any resulting diminution in the value of his
property.9 "We deal here with federal domain, an area which
Congress can completely pre-empt, leaving no vested private
claims that constitute 'private property' within the meaning
of the Fifth Amendment."10
The regulatory impact of a MEP system must be borne
precisely in mind. It does not proscribe any private business
137
-------
or public enterprise. It does not even prohibit discharges of
industrial or municipal wastes. Rather, it is a scheme for
allocating a scarce resource—the capacity of a waterway to
assimilate wastes—in an efficient way among a number of competing
uses, by means of a market mechanism. If a wasteproducer can
recycle his wastes instead of discharging them, he is free to
carry on his business without need of effluent permits. If he
has no practicable choice but to use a waterway for waste
disposal, he has no right to assume that the common property
resource will forever be made available to him free of charge.
He may fairly be compelled to pay a price for its use — if
indeed he is permitted to go on using, it at all — and to
internalize this cost as a cost of doing business. He may
have to go out of business because he cannot afford the
cost, but his case is, in that event, essentially no different
from any other failing enterprise. Analogously, if the federal
government were to raise the price of scarce lumber from national
forests to a point where some lumber users went out of business,
they could hardly argue that they were entitled to compensation
for a taking.
The claim of unequal protection may be more rapidly
disposed of. Auctioning off scarce resources to the highest
bidders or creating a market for such resources is a rational,
non-discriminatory way of allocating them. Moreover, priority
of position on a stream does not entitle one to priority in
138
-------
any redistribution of discharge permits, when the privilege
of discharging any waste from a point source to a receiving
waterway has already been made expressly and totally condi-
tional upon having a license or permit to do so.11 it is
clear that, as licenses may be granted to engage in certain
otherwise prohibited activities — e.g., broadcasting or
1 ?
liquor licenses — so they may be taken away. They confer
no vested rights. Especially is this true of discharge
privileges which are subject to the navigational servitude.
The MEP System and Taxation
Absent a specific legislative direction to the contrary,
marketable effluent permits purchased by an industrial or
commercial discharger will probably be treated for tax purposes
as intangible assets used in the trade or business of the
discharger. Intangible assets such as patents, pipeline
rights of way, copyrights, licenses, franchises and contracts
are depreciable if it can be established that they have limited
useful lives,13 but only straight-line depreciation is allowed.
The same rules should apply to the MEP system permits. If each
one expires at a fixed interval with no guarantee of reissuance
to the current permitholder, then it has a useful life of fixed
duration and its cost is accordingly deductible in equal yearly
increments over that period of time.
139
-------
If discharge permits are not actually used after pur-
chase but are held in reserve, it will be a question of fact
in each case whether they are "used in trade or business" of
the discharger so as to be eligible for depreciation deduc-
tions. Arguably, they will be eligible if they have been
purchased for such possible use and if there is any likelihood
of their being so used, whether or not the need for them ever
fully materializes or is fully sustained throughout the term
for which the permits were issued. The opposite conclusion
would be reached in the case of permits held for speculative
purposes. If conservation groups acquire permits, no deprecia-
tion deductions would be allowed on account of the absence of
any connected trade or business.
Gains or losses realized upon resale of permits would be
calculated on the depreciated basis, or on the purchase price
in the absence of depreciation, and would be classified as
long-term or short-term capital gains to be netted with other
comparable gains or losses for the year in accordance with
familiar rules of tax accounting.
Enabling Legislation for the MEPSystem
Since there is currently no authorization under federal
law to establish a market for discharge permits, fresh legis-
lation would be necessary for this purpose. As is mentioned
above, the MEP system should be meshed with the ongoing NPDES
permit program. For this reason, and because the purpose
140
-------
of the MEP system is to implement the 1972 Amendments, it
would make sense to introduce the system by means of further
amendments to the Federal Water Pollution Control Act.
Partly for the same reason, administration of MEP
should be vested by statute in the federal Environmental
Protection Agency, which is responsible for regulating,
directly or indirectly, virtually all aspects of the national
program for water quality control. If any other federal
agency were to be put in charge of the MEP system, conflicts
with EPA over policies and strategies and unnecessary dupli-
cation of intelligence-gathering functions would be difficult
to avoid.
The 1972 Amendments pose no obstacle to the pricing of
residual discharge privileges through a marketable permit
system. The Act does not guarantee waste producers that if
they will only adopt controls to reduce their wastes to a cer-
tain degree, they will be permitted to dump the residue free
of charge into public waterways. To the contrary, the goal
of the Act is zero discharge and NPDES permits confer privi-
leges of only temporary duration, which are likely to be
renewed only on condition that the permittee takes successive
steps toward eliminating his discharge. Therefore, to dis-
courage discharges by a combination of prohibitions and prices
would appear to be consistent with the policy of the FWPCA.
141
-------
The Act will have to specify the relation between the
MEP system and the NPDES permit system. The Act could make
applicable to the MEP system the same requirements of effluent
monitoring, reporting, recording and submission to inspection
that so obtain in the NPDES. Further informational requirements
for the MEP system, especially the recording of market transac-
tions at a central registry, could be developed by administra-
tive regulation. Discharges in excess of MEP permit allowances
could entail the same civil and criminal penalties as the FWPCA
specifies for violations of NPDES permits, as long as these
remain far in excess of the permit price.
The Act itself should determine whether permits are ini-
tially to be sold at auction or allocated in some non-market
manner; whether municipalities must pay for the initial allo-
cations they will need for their non-Industrual wastes; for
what terms permits shall be issued; what their status for tax
purposes shall be; and what restrictions, if any, there shall
be on reserve permit holdings to guard against anyone's corner-
ing the market. If permits are initially sold, provision might
be made in the Act for allowing dischargers to pay for them in
installments over time.
In a preamble to the Act, the rationales for MEP should
be carefully explained in terms intelligible to the layperson.
MEP is an unfamiliar technique in this field, and the better
it is explained, the better its chances of gaining acceptance
142
-------
and withstanding constitutional challenge. As with the dispo-
sition of the NPDES permits, public notice and a full public
hearing should be held on the proposed determination of the
number of marketable effluent permits and the manner in which
they are to be distributed and traded. These requirements
should be written into the enabling act. They embody the view
that the administrative process should be open to public partici-
pation, especially when sensitive issues of policy, such as the
degree of pollution control and water quality, are being decided.
Other desirable features of the enabling legislation can
be derived from the discussion in the remainder of this section
and in Section 2.
The MEP System and the NPDES
Under the provisions of the 1972 Amendments, effluent
restrictions will be administered through the National Pollutant
Discharge Elimination System (NPDES). Every discharger must
have an NPDES permit,18 which will be issued after public
notice and opportunity for public hearing on the permit appli-
cation has been given,19 either by EPA or by a state whose permit
program EPA has approved. The permit will specify effluent
limitations or quotas for various waste parameters and deadline
dates by which they must be achieved, together with strict
requirements for influent and effluent monitoring, reporting,
20
recording, and submission to official inspections. The dead-
lines will in some cases be earlier than the overall 1977 and
143
-------
1983 deadlines specified in the Act. All permits must be for
21
fixed terms not exceeding five years. Any permit may
be "terminated or modified for cause including, but not limi-
ted to...change in any condition that requires...reduction
22
or elimination of the permitted discharge." As permits are
renewed, it can be expected that effluent restrictions will be
progressively tightened, working toward the Act's ultimate
23
goal of zero discharge by 1985. EPA hopes to have all
initial permits issued by December 31, 1974, since that is
the deadline contemplated by the Act for completion of this
function, and since the target dates for achieving effluent
limitations could hardly be met otherwise.
If we assume that, as a matter of policy, a MEP system
should be so fashioned and introduced as not to interfere unduly
with the regulatory regime now unfolding under the new FWPCA,
how might the desired accommodation of the MEP system to the
NPDES best be achieved?
First of all, the MEP system would be used to supplement
present control methods and would not supplant the 1977 effluent
limitations being promulgated by the EPA. It is assumed, there-
fore, that all dischargers will operate under the 1977 waste
treatment constraints that are given in the legislation; indus-
trial dischargers are required to utilize best practicable
treatment technology and municipal dischargers are required to
utilize secondary treatment process. The permits issued
under the NPDES will be tailored to fit those constraints.
144
-------
The MEP system would allocate waste treatment within
the limits proscribed by the 1977 treatment constraints.
Suppose, for example, that the gross waste load of polluter
i is X^r the amount of waste reduction accomplished by the
polluter is x±, and the resulting discharges are equal to w.,
where, of course, wi = xi - xi« The effect of the 1977 con-
straints is to restrict x..^ to values greater than a specified
level, x"i. The effect of the MEP system is to require that
the polluter hold at least w. permits where w. = X. - x. ; in
this example each polluter is given this number of permits at
the outset.
If, in 1977, a polluter wishes to expand operations, more
permits must be purchased on the open market from some other
polluter willing to restrict waste discharges more than the
required amount, x..
Beyond 1977 when the regulatory authority wishes to work
toward further waste reductions, the MEP system permits will
be gradually withdrawn from the market through open market
purchases or by replacing fewer permits than expire. It is
at this time that the full effects of the MEP market begin to
take effect, automatically allocating the discharge privileges
and waste treatment among polluters.
It is, of course, not necessarily the case that w_^ permits
be given to each polluter. Some proportion of this amount,
145
-------
say .8w., might be issued, the expectation being that the
polluter will either buy more permits in the MEP market,
or maintain a level of discharges below x.^. In particular,
there are some for which water quality standards will not be
met unless discharges are reduced beyond the levels implied
by the 1977 treatment constraints. In those cases, the MEP
permits must be issued in lesser amounts.
An additional reason for issuing fewer than w. permits
is to preserve the efficiency properties of the MEP system.
If, for each polluter, waste discharges are constrained to be
less than w.. and that number of permits is distributed to
ik
each polluter, then the only opportunity for market transac-
tions arises when a polluter wants to grow or a new polluter
tries to enter the river basin.
In the joint operation of the MEP system and the NPDES,
each polluter would be required to apply for and receive the
NPDES permit in order to establish the 1977 treatment require-
ment. This requirement would remain a constraint; as is
presently contemplated, each polluter would be required to obtain
an NPDES permit. In addition, however, the polluter must hold
marketable effluent permits for those pollutants included in the
MEP system. Under this approach, the polluters are allowed to
discharge at rates not to exceed the lesser of the amounts in-
dicated by the NPDES permits and the marketable effluent permits.
146
-------
Administrative Costs of the MEP System
Existing data on the NPDES program element costs25 do
not allow determination of the level of administrative costs
for a marketable permit system except in relation to exist-
ing programs. It is nevertheless possible to make a comparison
between the administrative requirements of the MEP system, the
effluent charge approach, and the NPDES. This comparison is
outlined in Table 7-1 which gives the incremental requirements
of the MEP system and the effluent charge system over those of
the NPDES.
The first row entry, "information from operators" refers
to the operator-submitted forms and data contained thereon
26
that are mandatory under NPDES and that would also be required
with essentially the same information for a marketable permits
system—to guide market regulation, monitoring, and enforce-
ment—and for an effluent charge system—to facilitate monitoring
and revenue collection.
Row two, "permit allocation" refers to the process whereby
discharge permits are issued to specific dischargers. No such
step occurs with an effluent charge system, except for toxics
and those other materials not covered by charges; under NPDES,
permits are issued subject to effluent limitations, water
quality standards, new source performance standards, and toxic
and pretreatment effluent standards established under authority
147
-------
Table 7-1
Requirements of Marketable Permits System
Compared to Requirements of the
NPDES and of Effluent Permits
NPDES
Information
from Operators same
Permit Allocation same
Market Regulation same
Public
Participation same
Determination of
Construction
Compliance same
Monitoring same
Enforcement same
Planning same
Revenue Collection same
Effluent
Charges
same
less
same
less
same
same
less
same
more
Marketable
Permits
same
same or less
more
less
same
same
same
less
more
148
-------
27
of the 1972 Amendments. With the MEP system, there are
two design alternatives with respect to permit allocation:
either they are allocated as in NPDES (or by an essentially
similar procedure) or they are allocated by auction. With the
first case, administrative requirements are identical; with
the second case, the MEP system requires determination of sum
of discharge rights and organization of the auction, but beyond
this the allocation is automatic.
Row three, "market regulation" concerns an administrative
function required only by the MEP system. Market regulation is
made necessary in part by problems of market size and collusion
discussed elsewhere in this report. Even in the absence of
market problems, the regulatory authority must know who has
permits (and standard NPDES-type forms would probably be re-
quired from dischargers whenever permits changed hands) and
must oversee all market transactions.
Row four, "public participation" refers to the series of
"notice and public participation" regulations issued as part
O O
of the NPDES. These regulations were promulgated by the
Administrator of the EPA to provide public hearing opportunity
as mandated by Section 402 of the 1972 Amendments. A MEP
system would reduce opportunities for public participation
in determining the allocation of permits insofar as permit
allocation was accomplished by a market. Presumably public
participation in hearings would occur only when total
149
-------
discharge quantities are being determined for a stream. At
other times public participation would be through the market
only. Although public access to information, appeals provi-
sions, and other safeguards as included in the regulations
would be retained, some costs of hearings would be saved in
either the effluent charge or marketable permit approach.
Row five, "determination of construction compliance" is
of principal relevance with respect to old sources that are
given a period of time during which to establish compliance
with discharge permit conditions. Because the MEP system
would not become operative until 1977, at the earliest, and
because most sources will have achieved construction compli-
ance by that date, administrative requirements under this
heading can be expected to be small. In any event, these
requirements would not differ among system alternatives.
Row six, "monitoring" refers to the entire series of
measures necessary to ensure against cheating, including
point source monitoring on a regular basis, acquisition of
stream quality data, spot-checking of suspected violations,
and organization of data into an accessible, meaningful
form. It is difficult to imagine differences in monitoring
2Q
requirements for an effective NPDES, for an effective
marketable permits system, and for an effective effluent
charge system. Consequently monitoring requirements are
considered equal for the three alternatives.
150
-------
Row seven, "enforcement" highlights an important differ-
ence between the MEP and effluent charge systems. In the
former, even more so than in NPDES, dischargers face an
inelastic supply of discharge rights in the short run. That
is, at any point in time the discharger must discharge no
more than the amount specified on that discharger's permits.
Consequently, it is more difficult to keep dischargers within
the basic workings of the system; effluent charges offer an
elastic system of discharge rights and shift the enforcement
burden to the revenue collection function. Both the MEP
system and NPDES must rely on penalties as enforcement weapons
and must invest approximately like amounts in enforcement.
Row eight, "planning" highlights an important advantage
of marketable permits: the planning requirements are less
than in the other two systems because the administering
agency only has to set the total waste quantities (although
in some variants of the system these quantities must be
reach-specific). Allocation of permits among dischargers
takes place in the market, not by administrative fiat.
Unlike with an effluent charge system, waste quantities are
set and it is not necessary to predict discharger response
to a price.
Row nine, "revenue collection" is an administrative
task of primary relevance to an effluent charge system. In
that system the regulatory authority must determine the fee
151
-------
and extract it from the discharger. Revenue collection is
also necessary in the MEP system, however the amount of the
monetary transfer is determined by the market and connected
with the transfer of permits.
To summarize, a marketable effluent permit system does
not entail major new administrative requirements with the
exception of a market regulation function. Requirements for
market regulation can be expected to be offset by reduced
requirements for public hearings and planning. By compari-
son, effluent charges require less enforcement and market
regulation effort but greater revenue collection and planning
efforts. We conclude, therefore, that the costs of adminis-
tering such a system would be essentially the same as the
costs of administering the existing NPDES in any state or
river basin.
152
-------
NOTES
1 E.g., Gibbons v. Ogden, 22 U.S. (1 Wheat.) 1 (1824);
U.S. v. Holt State Bank, 270 U.S. 49 (1926); U.S. v.
Appalachian Electric Power Co., 311 U.S. 377 (1940). See
Silas R. Lyman, The Constitutionality of Effluent Charges,
(University of Wisconsin Water Resources Center; Madison,
Wisconsin; May, 1969) 140-156.
2 Cf. Mugler v. Kansas, 123 U.S. 623 (1887) and Goldblatt
v- Hempstead, 369 U.S. 590 (1962) with Pennsylvania Coal
Co., v. Mahon, 260 U.S. 393 (1922).
Joseph L. Sax, "Takings, Private Property and Public
Rights," 81 Yale L.J. 149, 152 (1971).
Sax, p. 156.
5 Sax, p. 162.
6 E.g., Gibson v. U.S., 166 U.S. 269 (1897); Zabel v. Tabb,
430 F.2d 199, 206 (5th Cir, 1970); City of Eufala, Ala, v. U.S.,
313 F.2d 745 (5th Cir. 1963).
The Federal Water Pollution Control Act primarily regulates
"discharge of pollutants" and defines this term as "any addi-
tion of any pollutant to navigable waters from any point
source." Section 502(12) "Navigable waters" is further defined
as "the waters of the United States, including the territorial
seas." 502(7) The Conference Report on the Bill, S.2770, which
became the Federal Water Pollution Control Act Amendments of
1972, states the conferees' intent "that the term 'navigable
waters' be given the broadest possible constitutional inter-
pretation..." Conference Report to Accompany S.2770 (September
28, 1972), p. 144. Judicial precedent indicates that virtually
all public waterways can be characterized as navigable waters
of the United States. E.g., U.S. v. Grand River Dam Authority,
363 U.S. 229, 232-33 (1960).
8
U.S. v. Rands, 389 U.S. 121 (1967).
Gilmann v. Philadelphia, 70 U.S. (3 Wall) 713, 725 (1965).
9
10 U-S. v. Twin City Power Co., 350 U.S. 222 (1956).
1 Federal Water Pollution Control Act Section 301(a).
153
-------
NOTES (continued)
FRC v. Nelson Bros. Bond & Mortgage Co. ', 289 U.S. 266
(1933) ; Seidenberg v. McSorley's Old Ale House , 308 F. Supp.
1253, 317 F. Supp. 593 (DCNY 1969).
13 IRS Reg. 1.167 (a) -3.
14 IRS Reg. 1.167(c)-l.
15 IRC Sec. 1231.
Federal Water Pollution Control Act Section 309.
17 Sec. 402.
-| O
xo Sec. 301 (a) .
19 Sec. 402 (b) (3)
20 Sec. 402 (b) (1) and (2) .
21 Sec. 402 (b) (1) (B)
22 Sec. 402 (b) (1) (C)
23 Sec. 101 (a) (1)
24 Sec. 402 (k)
25
Data available from the EPA Region I office in Boston
and personal communications with administrators in Connecticut,
New York and Michigan. Connecticut, New York, Michigan and
Washington are the only states having received EPA approval
of their programs to participate in the NPDES.
26 40 CFR, Part 126.
27
See especially, Title III.
2 p
40 CFR Parts 124 or 125, Subpart D.
29
40 CFR Part 124, Subpart G, and Section 125.27 of Part 125.
154
-------
Section 8
Evaluation and Comparison of the MEP System
From the analysis of the previous sections it is possible
to draw conclusions about the MEP system. The most suitable
variant of the MEP system and an evaluation of that system
are presented here. This section also gives a comparison of
the MEP system with alternative approaches to control. As is
discussed in Section 1, the basic criterion of this evaluation
and comparison is the ability of the control method to imple-
ment the goals of the 1972 Amendments, and to do so in an
efficient and equitable manner. Legal and political feasi-
bility and administrative ease are also important criteria.
Details of the MEP System
Many different variants of the MEP system are discussed
in Section 2. In addition, aspects of this control system
are analyzed in other sections of the report. Based on the
analysis of those sections, suggestions can be made regarding
the best form of the MEP system. These are as follows:
New legislation—probably in the form of amendments to
the FWPCA— is required for the introduction of the MEP system.
The 1977 treatment requirements of the 1972 Amendments
will be implemented as presently planned, and those require-
ments will remain as constraints on polluter behavior.
155
-------
Quality standards will also continue to be in force with the
total number of permits limited in accordance with those con-
straints.
The initial distribution of permits can be determined
on the basis of the desired distribution of costs. A combina-
tion direct allocation-Dutch auction system can be used to
achieve the initial allocation of permits and to initiate the
trading of permits. An example is the following: give
municipalities 100% of the permits needed to cover their
domestic waste discharges (as determined by the 1977 treat-
ment requirements) and give industrial polluters 50% of the
amount needed to cover their allowable discharges. Distri-
bute some additional permits through a two-way Dutch auction
in which polluters are allowed not only to buy additional
permits, but are also allowed to sell. A system of this
type retains the desired efficiency properties and has the
flexibility to allow a great variety of cost distributions.
The marketable effluent permits should be depreciable
on a straight-line basis for industrial dischargers, and
their purchase by municipalities should be subsidized at
the same rate as the costs of treatment are subsidized.
If the capital and operating cost subsidies differ, a
weighted average of those subsidies should be used to deter-
mine the permit subsidy level.
156
-------
The pollutants included in the MEP system should
include BOD5 or BP, and any other pollutants that are dis-
charged by several polluters and that cost significant
amounts to control.
The system should not be geared to the differential
effects on water quality of different dischargers. That is,
the use of transfer coefficients should be minimized. The
marketable effluent permits should therefore be effluent
discharge licenses rather than ambient quality degradation
licenses, and should trade among polluters on a one-to-one
basis. The total number of permits issued should be small
enough to assure that quality standards will be met.
The length of term of permits is, within reasonable
limits, a variable that does not affect the workings of the
system significantly. One possible approach is to issue
permits for 2, 4, 6, 8, and 10 year terms—perhaps an equal
number of each. Then at the expiration of the 2-year permits
a decision can be made as to whether to sell additional per-
mits to replace them, or, as is more likely given the man-
date of the 1972 Amendments, those permits can be perma-
nently retired as a step toward the goal of discharge elimi-
nation.
After the initiation of the MEP system, alterations in
the number of permits should be effected only through open
157
-------
market purchases and sales (or, as above, through natural
attrition due to the expiration of permits).
The purchase of permits should be open to all.
All sources for which the measurement of discharges is
possible should be required to hold permits. There is little
reason to exclude a source from the permit system for any
reason other than the inability to measure discharges with
sufficient accuracy.
There should be no variations in the number of permits
or in the privileges that they confer except as provided for
above. This precludes the use of seasonal or hydrological
changes designed to make use of changing assimilative capacity.
River basin areas covered by one market should be fash-
ioned so as to provide the largest market possible, consistent
with quality constraints. This implies that interconnected
basins could be included in the same market if they are
similar enough to ensure that there will be no large scale
shift of discharges from one basin to the other.
The money collected through the sale of permits and
through the enforcement of the MEP system can be used to
support the administration of the system, including data
acquisition, monitoring and enforcement functions, and the
purchase of permits on the open market. Public works for
158
-------
the improvement of water quality are also a potential use of
the money, but only if such works would improve water quality
more than the purchase of permits.
A monitoring and enforcement system must be maintained
to assure that discharges by polluters are covered by the
requisite permits. Fines and penalties for violations
should be well in excess of the market price of permits.
The NPDES permits will be required in addition to the
MEP permits. Any discharge of wastes must be covered by
both types of permits.
All transactions involving MEP permits should take place
in the regulated, central market. Bid and ask prices should
be readily available through this market and all trades must
take place on ah arm's length basis. Transactions should be
recorded and transmitted to the enforcement personnel. If
necessary, additional rules should be established in order to
assure the competitive functioning of the market.
This MEP system has the properties discussed in Section 2,
It is efficient, it handles the growth and entry of polluters
automatically and efficiently, it provides an indicator of the
marginal cost of waste discharge reduction, it is flexible,
and it is effective. These properties, of course, depend on
the smooth operation of the market. Unless the market is a
reasonably competitive one, the MEP system will not perform
159
-------
its control function as well. The MEP system is flexible
enough so that it can be fashioned to distribute costs
equitably. The possibility of combining the direct allo-
cation of permits with a Dutch auction provides much leeway
in the construction of the control system and its effects
on individual dischargers.
Administratively the MEP system is no more complicated
than other systems of control. The organization and regula-
tion of the market are not demanding enterprises. The MEP
system is constitutional, but would probably require addi-
tional legislation.
Politically the MEP system suffers from extreme under-
exposure. The introduction and explanation of any new
system of control will be difficult and potentially unsuc-
cessful.
The efficiency of the MEP system, and its flexibility
to provide for growth and the equitable distribution of
costs, are its main virtues. The analysis of the previous
sections indicates that the main threat to the system is
the possibility of market manipulation. If the number of
market participants is small or if the concentration of
market power is extremely uneven, then the market cannot
be expected to perform its allocative function efficiently.
160
-------
The Mohawk simulation results suggest that the number of
market participants required to avoid the problems of market
manipulation may be as low as 8. In addition, those simu-
lations indicated that, under stringent limitations on total
river basin discharges the 1977 treatment constraints do not
interfere with the efficient functioning of the market.
Market problems can be best avoided by the careful choice
and definition of market regions. Additionally, there is the
possibility of market rules such as limitations on the per-
centage of permits held by an individual. It may also be
wise to require of each permit holder a demand and supply
schedule—a statement of the number of permits that would be
sold or purchased by the permit holder at each price (or for
a reasonable set of prices) . This could help to locate and
avert monopolistic behavior, and would also assure that the
equilibrium bid and ask prices were available for dissemi-
nation.
As a last resort, of course, the market can be phased out
of those regions where it works poorly. Our evaluation, how-
ever, is that it will probably work efficiently in many
places, and little will be lost in those cases where it
works poorly and must be abandoned.
The MEP System Versus Effluent Charges and Effluent Standards
Here we compare the MEP system with the use of effluent
161
-------
charges and effluent standards. In a system of effluent
charges a price is charged polluters for each unit of wastes
that is discharged. The price is established on the basis
of the degree of waste control desired and can be changed
to effect different total waste discharge reductions. In
a control system based solely on effluent standards, allowa-
ble discharges are established administratively for each
individual polluter. The discharge of wastes is authorized
by the regulatory authority through a system such as the
NPDES.
The efficiency properties of the three systems differ.
In both the MEP and the effluent charge systems, continuing
pressure is maintained on dischargers to reduce discharges
and to seek better ways to deal with wastes. Effluent
standards, if fashioned correctly, also have the property
of inducing the use of least-cost methods of waste control.
They do not, however, provide a continuing incentive for
the reduction of waste discharges.
The most important difference among the three methods
related to efficiency is related to total basin treatment
costs. In both the MEP and the effluent charge systems, the
incentive of the price is used to assure the equalization
of marginal treatment costs among different polluters. This
is a necessary condition for the minimization of total basin
162
-------
treatment costs. In contrast, the effluent standards approach
does not automatically allocate treatment activities in an
efficient manner.
The MEP system has the additional advantage of providing
for growth through a natural and automatic mechanism, in
both the effluent charge and the effluent standard systems
adjustments must be made in the system parameters in order to
control the increases in discharges that occur naturally over
time. For the effluent charge system, only one parameter,
the effluent charge, must be adjusted while in the effluent
standard system a decision must be made with regard to how
each individual discharger or class of dischargers will be
treated. In contrast to both of these systems, no adminis-
trative adjustments are necessary in the MEP system. Growth
and entry are handled automatically through the market. As
long as the regulatory authority issues no additional permits,
the market maintains a policy of nondegradation.
Unlike the effluent standard approach, both the MEP and
the effluent charge systems provide an indicator of the mar-
ginal costs of waste control. The price of the permits or
the level of the effluent charge can be used as a guide
to future public investments or to changes in the level of
overall pollution control. For example, in run 1 of the
simulation model with the permit supply equal to 4,000
pounds per day of BOD, the price of an effluent permit is
163
-------
$973. This indicates that the out-of-pocket, subsidized
marginal treatment costs for dischargers is $973 per pound
per day of BOD. This level may be considered prohibitive
and the number of permits consequently increased.
The administrative aspects of the systems are compared
in Section 7. The conclusion there is that the costs are
comparable. For the effluent charge system it is necessary
to predict the response of polluters to the effluent charge.
This is not necessary in the other two systems. However,
enforcement is more automatic for the effluent charge system
than for the other two systems. Other factors such as the
need in the MEP system to operate a market, balance with the
difficulties of specifying effluent standards and the need
for an effluent charge collection system.
With regard to equity, each of the systems can be fash-
ioned so as to produce many different cost distributions.
Both the MEP and the effluent charge systems have the advan-
tage of impersonally allocating costs. Once the market or
effluent charge is established, the need to negotiate admin-
istratively with individual polluters is limited.
In terms of the legal and political feasibility of the
systems, arguments can be made that favor any of the three
systems. The effluent standard approach requires no addi-
tional legislation, while the other two control methods
164
-------
probably do. The MEP system is probably easier to integrate
with the NPDES than is the effluent charge system. Ulti-
mately, however, the palatability of any system is going to
depend on who calls the tune. We would argue that both the
effluent charge and the MEP systems are more likely to prove
effective in limiting waste discharges, and are therefore
more acceptable to regulators and less acceptable to pollu-
ters.
In sum, it is the efficiency properties of the MEP
system which set it apart from other methods of control.
Under conditions conducive to the functioning of a good
market, the MEP system offers performance superior to the
effluent charge and effluent standard approaches. If those
conditions are not met and the market does not function
properly, then the effluent charge system is the best con-
trol alternative. Only experience with the actual use of
a marketable effluent permit system will allow the more
precise determination of those conditions.
165
-------
AN EVALUATION OF MARKETABLE EFFLUENT PERMIT SYSTEMS:
APPENDICES
prepared for the
Environmental Protection Agency
by
Meta Systems Inc
Cambridge, Massachusetts
August 1974
-------
TABLE OF CONTENTS
APPENDIX A: The Mohawk River Permit System
Simulation Results
APPENDIX B: A River Basin Case Study:
The Mohawk River Basin
11
-------
APPENDIX A
THE MOHAWK RIVER PERMIT
SYSTEM SIMULATION RESULTS
This appendix contains the computer output and accompany-
ing figures for the Mohawk River permit system simulation model,
The simulation model is discussed in Section 6 of this report.
Each run of the computer model is described in that section.
For convenience, Tables 6-3 and 6-4 have been reproduced in
this appendix. They provide a key to the various computer
runs.
The printed and graphical output of the model is described
and illustrated in Section 6. The output is presented here
following Tables 6-3 and 6-4. First the written market demand
curve and the two market-clearing results are given for each
of the 27 computer runs. They are arranged in order of com-
puter run. Next the graphical demand curves for seven selected
computer simulations are given. They are arranged in order of
computer run with the individual demand curves for each run
preceding the aggregate demand curve for that run. The pages
of written output for each computer run are arranged as a re-
movable entity to facilitate the comparison of results. Sim-
ilarly, the graphical demand curves for each run are fastened
together and can be removed for comparisons among computer runs,
A-l
-------
Table 6-3
Inputs for the One-term Permit Simulations
Run Number
8
10 11 12 13 14 15 16 17
Discount rate
(% per year)
Capital cost
subsidy (%)
Operating and
maintenance
cost subsidy (%)
Pollutant type
(BOD or BP)
Permit term
(years)
Lower bound on
treatment
(scheme)
10
90
30
BOD
5
2
7
0
0
BOD
25
0
10
90
30
BOD
5
0
10
90
30
BOD
1
2
10
90
30
BOD
10
2
10
90
30
BOD
15
2
10
75
75
BOD
5
2
20
90
30
BOD
5
2
10
90
30
BOD
5
2
10
90
30
BOD
5
2
10
90
30
BOD
5
0
10
90
30
BP
5
2
7
0
0
BP
25
0
10
90
30
BP
5
0
10
90
30
BP
10
2
10
90
30
BP
15
2
10
90
30
BP
5
0
Runs 11 and 17 were made with only two cities in the system: Ft. Plain and Ilion.
Runs 9 and 10 have all eight Mohawk cities plus an additional market participant
representing the demand by environmentalists. All other runs were made with the
market comprised of the eight Mohawk cities.
-------
I
CO
Table 6-4
Inputs for the Staggered-term Permit Simulations
Run Number
19 20 21 22 23
Discount rate
(% per year)
Capital cost
subsidy (%)
Operating and
maintenance cost
subsidy (%)
Pollutant type
(BOD or BP)
Permit term
(years)
Lower bound on
treatment
(scheme number)
10
90
30
BOD
5
2
10
90
30
BOD
10
2
10
90
30
BOD
15
2
10
90
30
BP
5
2
10
90
30
BP
10
2
10
90
30
BP
15
2
For all runs the market consists of the eight Mohawk cities,
-------
The following three pages contain Tables A-l, A-2,
and A-3 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-l gives the aggregate
demand schedule for permits from computer run 1. Tables A-2
and A-3 give the market-clearing results for computer run 1
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three
tables are described in more detail in Section 6 of this
report.
A-4
-------
Table A-l
AGGREGATE DEMAND SCHEDULE FCR RUN 1 OF THE MCHAWK PERMIT SYSTEN SIMULATICN
PRICE OF PERMIT
0.0
158.90
195.66
222.45
230.14
246.59
253.06
323.90
359.16
368.??
392.70
423.36
435.45
510.71
537.87
615.78
740.76
749.31
799.73
86^.67
DEVANDfLB
13624
12912
11741
11612
1.1545
11414
11245
10391
10C51
9987
9881
9734
9410
9188
8952
8127
6776
6684
6158
5345
S/DAY
.00
.00
.36
.86
.30
.00
.80
.33
.96
.02
.14
.00
.92
.34
.81
. 8C
.79
.31
.23
.33
PRICE OF
880
957
983
992
996
1167
1222
1362
1409
1556
1616
1952
1997
2155
2214
224C
3067
3245
3964
4633
5403
PERMIT
.07
.83
.68
.19
.06
.62
.27
.84
.44
.50
.14
.21
.57
.18
.97
.1C
.10
.83
.91
.98
.06
DEM AND ,LB
5176
4195
3661
3752
3700
2640
2433
2216
2141
1SC3
1607
1265
1220
1058
1C21
1005
847
838
733
712
691
S/OAY
.42 •
.71
.94
.03
.65
.16
.66
.13
.01
.9G
.75
.94
.39
.79
.01
.13
.02
.33
. CC
.00
.00
-------
Table A-2
"ESPOUSES <~n Br^OEDS CQR RLW I CF THE MCHAkK PERMIT SYSTEM SI^ULATICN
NU.^B^K ISSlFr^ 4013. TERM- 5 YRS UNIT=L3S/CAY 30C
MARKET CLEARING °"TCE=$ 972.99
FT D|_flTW
CANAJQHAOIE
HERK IMER
L!TTLC FALLS
ROM =
ST
UTICA
TOTfiLS
T L I ON
FT °LAIM
CAMAJOHARIF
HERKIMER
LITTLE FALLS
ROME
ST JChNSVILLE
UTICA
TOTALS
PERMITS PCUGHT
L3S/DAV
601.92
277.22
655 .?6
295. 35
514. t9
696. 19
508. C4
451.25
40CO.CO
L3S/DAY
601.92
277. 22
655.36
295.35
514.69
696.19
508. C4
451.25
4000.00
CCST
J
535657.19
269126. 33
637656.75
237367.44
500783.69
577331.00
494313. 94
439C56. 19
389194C.CO
$/YR
154495.88
71153. 56
168213.31
75EC7. 25
1321C6.31
178692.56
130299.63
115822.63
1C26690.69
TREATMENT
LBS/DAY
4398.08
49C2.78
5344.6.4
1914.65
3815.31
7093.81
3771. Sfc
28378.75
59619.98
LBS/CAY
4398. C8
4902.78
5344.64
1914.65
3815.31
7093.81
3771.96
28378.75
59619.98
CCST
$
696975.63
546596.56
7957C1.25
54954.41
104946G.OC
1223471. OC
587485.31
2944344.00
7898987.00
$/YR
183861.56
144191.69
2C9SC5.31
14496.93
276846.69
322750.63
154978.13
776715.56
2083746. CC
TOTAL COST
$
1232632
816322.
1^33358,
342321.
1550243,
1900852,
1081799,
3383400,
00
94
OC
81
00
OC
00
OC
11790927.00
$/YR
338357.44
215345.25
378118.63
90304.13
408953.00
501443.IS
285377.75
892538.IS
3110436.OC
TOTAL NATION'S!. INCOME CQST=* 5 144286 . C C/YR
-------
Table A-3
RESPONSES OF BIDDERS FOR RUN 1 OF THE MCMhK PERMIT SYSTEM SIMULATION
NUMBER ISSUCC= '000. T=RM= 5 YRS UNIT=L3S/DAY BOD
MARKET CLEA-'lNr- P1? 1C E= $ 1496. 90
POLLUTER
TLICM
FT PLAIN
HESKIMFR
LITTLE FALLS
ROME
ST JGu"iSV!lLF
UTTCA
TOTALS
ILTCN
P T PLAIN
(-E0K IMF F
LITTLE FULS
ST JONSVILIF
U T I C A
TOTALS
MITS FCUGHT
LBS/DAY
^77 .56
262.79
336.62
245. c9
47. CO
140.00
301.95
288.00
2 000. CO
L3S/CAY
377. 5£
262. 79
336.82
245. £9-
47. CO
140. CO
301 .95
288 .CO
2000 .CO
CCST
$
565 162.05
393266. 31
504192.00
368C65.69
70354. 19
209565.75
451984.00
431 106.75
2993 794. CO
*/YR
149C39. 25
103769.69
133C05.44
97C95.38
18559.38
55233.28
119233.00
113725. 56
789760.44
TREATMENT
LBS/CAY
462?. 44
4917.21
5663. 17
1964.11
4283.00
7650.00
3978.05
28542. CO
61619.99
LBS/CAY
4622.44
4917.21
5663. 17
1964.11
4263. CO
7650.00
3978. C5
28542. CO
61619.99
CCST
$
9756S7. 88
564415.25
1189C71.0C
117727.00
1550027.00
1833961. OG
841996.44
31C5C67.CO
10177962.00
$/YR
257388.31
148692.25
313£75.94
31056.29
408895.88
483797.44
222117.94
819114.19
2684^38.00
TOTAL COST
$
1540859.DC
957781.56
1693263.00
485792.69
1620381.00
2043526.CO
1293980.00
3536173.00
12171755.CC
$/YR
406477.56
252661.94
446681.38
128151.63
427455.25
539080.69
341350.94
932839.75
3474698.00
TOTAL NATIONAL INCOME CQST=f 6449094.00/YR
-------
The following three pages contain Tables A-4, A-5,
and A-6 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-4 gives the aggregate
demand schedule for permits from computer run 2. Tables A-5
and A-6 give the market-clearing results for computer run 2
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three
tables are described in more detail in Section 6 of this
report.
A-8
-------
Table A-4
AGGREGATE DEMAND SCHEDULE FCB PUN 2 CF THE MGHAWK PERMIT SYSTEM SIMULATION
PRICE
OF P?PMIT
0.0
777 .36
999.07
58
1096
1156
1285
14-26
14? 1
1439
1564,97
1653.18
1853.92
2033
2149
2452
2543
2874
3529
3646
3852
4127
5091
19
,50
,71
,98
37
98
19
19
94
12
40
92
02
50
5404.02
DEM/WO,LB
36CC7
27276
25643
24255
23153
20187
17117
17040
16920
15031
14091
12940
12C88
11609
1058?
10248
9993
9312
9131
8823
8452
7219
6830
S/DAY
.00
.99
.84
.11
.09
.39
.62
.16
.68
.00
.9C
.54
.61
.74
.34
.97
.88,
.46
.65
.56
.16
.75
.91
PRICE OF
5626
587C
6366
6420
6536
6662
6788
6914
7723
8270
8954
8988
9708
10583
11699
12504
13546
13666
1480C
19062
19272
23712
28153
32593
PERMIT
.54
.94
.85
.66
.60
.67
.75
.82
.95
.79
.12
.39
.52
.73
.68
.22
.09
.64
.61
.48
.34
.82
.31
.79
DEMANDfLBS/CAY
6536.61
6213.35
82
90
17
82
16
50
13
08
77
5531
5454
5289
4513
4222
3930
2803
2512
2140
2122.15
1944.98
1729.66
1455
1253
1C90.C7
1078.51
969.84
839
837
733
712
11
85
34
64
OC
00
691.0C
-------
Table A-5
E0 !SGUrO= 403C.
MARKET CLF-APTNjr; P s T C E= $638 4 .78
YRS
MOHAWK PESMT SYSTEM SIMULATION
UNIT=L3S/DAY BOD
PPLLUTFP
1L
FT
HFRK INPP
L ! T T L F FALLS
ST JPHN:SVILLE
UTICA
TOTAL S
I LION
FT PL ATM
CANAJHHAPIF
H E R K I V E P
LITTLt FALLS
ROM"
ST JONSVILLE
UTICA
TOTALS
PF-M1TS FPUGHT
L 35/CAY
566.22
268 .12
582.36
230.80
74.65
765.50
451.73
1310.58
4000.01
, 12
.36
,80
LBS/DAY
566.?2
.263
58?.,
280,
74.65
765.50
451.78
1010.58
4000.01
CTST
t
3*393325.
1845925.
4039391.
1933272.
513920.
5270280.
3110430.
6957^25.
27539136.
$/YR
334518.
15840C.
344C49.
165F95.
44C99.
452247.
266<;03.
597C40.
CO
CO
00
CO
50
00
00
00
00
75
44
44
75
98
44
75
06
TREATMENT
LBS/DAY
4433.77
4911. 68
5417.64
1929.20
4255.35
7324.50
3828. 22
27819.42
59619.93
LBS/DAY
4433.77
4911.88
5417.64
1929.20
4255.35
7024.50
2828.22
27819.42
CCST
$
5709261.00
4211574. CC
6531159.00
389109.38
11054663.00
9135123.00
48469C2.0G
17716592.00
59594252.00
$/YR
489916.81
361398.94
560444.63
33389.82
948611.00
783593. 13
415917.00
1520276.00
2363158.00
59619.98
5113845.00
TOTAL COST
$
9607586.CO
6057499.00
1C540550. CO
2322381.00
11568588.00
14405403.00
7957332.00
24674208.00
87133504.00
$/YR
824435.56
519799.38
904494.06
199285.56
992710.94
1236140.00
682825.75
2117316.00
7477003.00
TOTAL NATIONAL INCOME COST= S 5 112846 . CC/YR
-------
Table A-6
RESPONSES OF 3ICDERS FOR SUN 2 OF THE MCHAfciK PER!" IT SYSTEM SIMULATION
NUM3C<3 ISSUrC- ''COO. TPRM=25 YRS UN I T=LBS/DAY BOD
MARKCT CLFAD!M3 PS 1C 5=$ 9484.89
^CLLUTF"
1LTCN
FT D|_IT^
CANiJCHt° IE
> I^CPK y MFR
|1 LITTLE FALLS
M ROME
ST JOHMSVILLF
UTIfA
TOTALS
ILICN
FT PLAIN
CANSJGH4P TE
)- F P k I v F P
LTTTLC FALLS
POMF
ST JCHN^V
UT I r ,l
TPTM S
PERMITS EfUGHT
L3S/CAY
257.79
340.66
237.66
47.CC
140.00
292.22
7W .00
2 0 00 . C 0
LP.S/CAV
396 .66
257.79
340.66
47.CC
140.00
292. "
2P8.00
2000 .CO
CCST
$
^762275. 00
2445142.00
3231142. OC
2254194.00
445789. 81
1327884.00
2771 704.00
7.731648.00
1396 9 7 76. CO
$/YR
222E44. 19
209 81 9. 81
°77267. 19
193434. 25.
38253.63
113946.88
237E42.38
234<*Q5. 13
1627613. OG
TREATMENT
L9S/D6Y
46C3.34
4922.20
5659. 34
1972.34
4263. CO
7650.00
3987.78
28542.00
61619.99
L6S/DAY
46C3.34
4922.20
5659.34
1972.34
4283.00
7650.00
3987.78
28 542. CO
61619.99
CCST
$
7G97130.CG
4296C48.00
8509386. OC
751572.13
11245437.00
14099454. OC
6152879.00
22994592. CO
75146448.00
f /YR
609C11.06
368647.69
73C198.C6
64493.08
964981.06
12C9636.CC
527984.06
1973186. OC
6448384,00
TOTAL COST
$
1C859405.00
6741190.00
11740528.00
3005766.00
11691226.00
15427338.00
8924583.00
25726240.00
94116240.00
$/YR
931855.25
578467.50
1007465.25
257927.44
1003234.69
1323832.00
765826.44
2207591.CO
8076197.00
TOTAL NATIONAL T\COMF CCST=$ 6448336.00/YR
-------
The following three pages contain Tables A-7, A-8,
and A-9 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-7 gives the aggregate
demand schedule for permits from computer run 3. Tables A-8
and A-9 give the market-clearing results for computer run 3
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three
tables are described in more detail in Section 6 of this
report.
A-12
-------
Table A-7
AGGREGATE DEMAND SCHEDULE FOP RUN 3 OF THE MOHAWK PERMIT SYSTEM SIMULATION
PRICE
H1
U)
134,
127,
153,
169
195,
222.
OF PERMIT
o.o
97.40
120.99
122.14
02
89
90
61
66
45
230.14
246.59
253.06
323.90
359.16
368.7.3
392.70
423.36
485.45
510.71
537.87
615.73
74C.76
DEMAND, 18
36007
26273
"4725
24641
23267
22801
20149
19003
16332
14210
13397
13C26
12774
11 147
10473
10722
9984
9734
9410
9188
R952
a 127
6776
S/DAY
.00
.81
.52
.59
.43
.32
.35
.71
.29
.58
.11
.50
.46
.48
.45
.40
.26
.00
.92
.34
.81
.EC
.79
PRICE OF
749
799
866
880
957
983
992
996
1167
1222
1362
1409
155£
1616
1952
1997
2155
2214
2240
3067
3245
3964
4683
5403
PERMIT
.31
.73
.67
.07
.83
.68
.19
.06
.62
.27
.84
.44
.5C
.14
.21
.57
.18
.97
.10
.10
.83
.91
.98
.06
CEMAND,LBS/DAY
6684.31
6158.23
5345.38
5176.42
4195.71
3861.94
3752.03
3700.65
2640.16
2433.66
2216.13
2141.01
1903.9C
1807
1265,
1220,
1058,
1C21.C1
1005.13
847.02
838.33
733.00
712.CC
691.00
.75
,94
3S
,79
-------
Table A-8
RESPONSES OF BIDDERS FOR =>IJN 3 OF THE MCKAWK PERMIT SYSTEM SIMULATION
«Ec ISSUEO 4000. TEPM= 5 YRS UMT = L8S/DAY 3CD
MARKET CLFAST^O a3ICE=$ 972.99
POL LUTE '5
ILIC\>
F T PLAIN
C AN A J CHAR IF
HFRKIMF3
LITTLr -ALLS
ST
UT ICA
TPTALS
I LION
FT OL
^ IB
LTTTLF FALLS
RCME
ST JOHNSVILLF.
U T T C A
TOTALS
PPRMITS ECUGHT
L3S/DAY
601. 52
277.22
655 .36
2
-------
Table A-9
RESPONSES CF OIC
R ISSUEC = 2000.
MARKFT CLFARINj PP I Cc = $ 1496 . 90
PQR RUN 3 PF THE MCf-AWK PERMIT SYSTEM SIMULATION
= 5 YP S UMT=LBS/OAY 8CC
Ul
POLLUTCR
ILICN
FT PLAIN
fANAJOHARIF
hERKIMEP
f LITTLE FALLS
RC^E
ST JCHNSVILLC
UTICA
TOTALS
T L I ON
FT PLAIN
H E R K I « E n
LITTLE FALLS
ST JnH\1SVILL'
UTICA
TOTALS
"5RMITS EPUGI-T
L3S/C&Y
377.56
262. 79
336 .£2
245. F9
47. CO
140 .CO
301 .95
288. CC
2000 .00
L8S/CAY
377. 56
262.79
336.62
''45.89
47. CO
140. CC
'01 .95
233 .CC
2 COO. CO
CCST
$
565162.06
393266.31
504192. CC
268C65. 69
70354.19
209565.75
451984.00
431106.75
2993794.00
$/YR
149C89.25
103769.69
133CC5.44
97C95.38
18559. 36
55283.28
119233. CO
113125.56
739760.44
TREATMENT
LBS/CAY
4622.44
4917.21
5663.17
1964. 11
4283.00
7650.00
3978.05
28542. CO
61619.99
L3S/DAY
4622.44
4917.21
5663.17
1964.11
42E3.CO
7650.00
3978. C5
28542. CO
61619.99
CCST
$
975697.94
564415. CO
1189071.00
117727. CC
1550C27.CC
1833961.00
841996. 5C
3105067.00
10t77C61.CC
$/YR
257388.31
148292,19
313675.94
31C56.29
4C8S95.88
4837<57.44
22211fi.CC
819114.19
2684^38.00
TOTAL COST
$
1540860.00
957781.31
1693263.00
485792.69
1620381.OC
2043526.00
1293980.CC
3536173.00
13171756.CO
J/YR
406477.56
252661.88
446681.38
128151.63
427455.25
539080.69
341351.CC
932839.75
2474698.CO
I'MCG'^ CCST=J 6 449094 .CO/YR
-------
The following three pages contain Tables A-10, A-ll,
and A-12 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-10 gives the aggregate
demand schedule for permits from computer run 4. Tables A-ll
and A-12 give the market-clearing results for computer run 4
when the supply of permits is set at 4fOOO and 2,000 pounds
per day of BOD respectively. The contents of all three
tables are described in more detail in Section 6 of this
report.
A-16
-------
Table A-10
AGGREGATE OEMANC SCHEDULE FOR "UN 4 CF THE MOHAWK PERMIT SYSTEM SIMULATION
I
t->
~4
ICE OF PERMIT
0.0
38. 11
46.92
53.35
55.19
59.14
60.69
77.68
86.1?
38.31
94.18
101.53
116.42
122.43
123.99
147.68
177.65
179.70
191.79
207.84
H''), IBS/DAY
13624.00
12911.99
11741.34
11612.86
11545.26
1141?.97
11345.77
10291.31
10051.95
9987.Cl
9381.14
9733.99
9410.93
9188.34
8952.81
8127.80
6776.79
6684.31
6158.23
5245.39
PRICE OF
211
229
225
227
238
28 C
293
326
338
373
387
468
479
516
521
537
735
778
950
1122
1295
PERMIT
.05
.70
.90
.94
.87
.01
.12
.83
.01
.27
.58
.17
.05
.85
.19
.21
.54
.40
.85
.30
.74
DEMAND,L8S/D4Y
5176.42
4195.72
•3861.94
3752.04
3700.64
2640.16
2433.66
2216.13
2141.01
1903.90
1807.75
1265.94
1220.39
1C58.79
1021.01
1C05.13
847.02
638.33
733.00
712.00
691.CC
-------
Table A-ll
NSES r~ 3ICCERS PCP RUN 4 Oc T(-E MOHAWK PERMIT SYSTEM SIMULATION
issucc= 4300. TERM= i YRS UMT = LBS/DAY BCD
CLE APING PRICE =4 233.34
I
H
00
PT LLUTCR
IL ICN
FT PLAIN
r ANA JOHAR IF
H E » K I M E '.
LITTLF FALLS
RCME
ST JOHNSVILL17
UT ICA
TOTALS
ILICM
FT PLAIN
CANAJDHARIE
HFP.KIMFR
LITTLE FALLS
ST JCHN3VILLC
UTICA
TOTALS
PERMITS BOUGHT
LBS/CAY
6C1 .92
277.?2
655.26
69
19
C4
x C
514
696
508
451.
4000.00
L8S/CAY
601.92
277.22
655,
295,
514
696,
S08 ,
, 26
"3 R
19
C4
451.25
4CCO. CO
CCST
J
140450. 13
64684.83
152=20.38
63915.44
120C96.00
162447.12
118544.56
105293.13
933351.56
t/YR
154495.81
71153.63
158213.13
75807.31
132.106. 19
178692.63
130299.56
115E22.94
026691.38
TREATMENT
LBS/CAY
4396.C8
49C2.78
5344.64
1914.65
3315.31
7C93.81
3771.96
28378.75
59619.98
LBS/DAY
4398.08
49C2.78
5344.64
1914.65
3615.31
7093.81
3771.96
25378.75
59619.98
CCST
$
167146.13
. 131C82.62
190822.06
13178.99
251677.75
293408.50
140688.75
706100.56
18943C4.00
$/YR
183661.56
144191. 5C
209905.19
14496.96
276646.75
322750.81
154978.31
776714.13
2083743. OC
TCTAL COST
$
307596.25
195767.44
343742.44
82094.38
371773.75
455855.63
259433.31
811393.69
2827655.00
$/YR
338357.
215345.
378118.
90304.
408952,
501443,
285377.
892537.
38
13
31
25
94
44
88
06
3110434.00
TOTAL NATIONAL INCOME CCST
5 144287 .00/YR
-------
Table A-12
DP
NUMBER ISSUED= 2000.
MARKET CLEARING 0RICE=$ 358.98
S FOR RUN 4 OF THE MOHAWK" PERMIT SYSTEM SIMLLATION
TERM= 1 YPS UMT = IBS/DAY BCD
!L ICN
FT PLAIN
CANAJOHAS IE
HERK I ME0
^LITTLE PALLS
ST JCHMSVILLi
UT IC'i
ALS
TLICN
FT PLAIN
CANAJCHA;. IE
(-.£ RK ! MPC
LITTLE FALLS
ST JG"
UT 1C A
TCTAL5
PERMITS ECUGhT
LBS/CAY
377. 56
262.79
336. E2
-245.89
47.00
140. CO
301.95
233. CC
200G .CO
LBS/CAY
377.56
2t2.1c,
336.62
2.45.89
47. CG
140. CC
301 ,95
238. CC
2CCO.CC
CCST
$
135525. CO
94335. 56
120913.38
88268. 13
16872.08
50257. 27
108393,06
103386.38
717960.81
$ /YR
149C89. 13
103169.56
133C05.31
97C95. 38
18559.27
55233.24
119?32.38
113725.50
739760.44
TREATMENT
LBS/OAY
4622.44
4917.21
5663.17
1964.11
4283.00
7650.00
3978. C5
28542.00
61619. S9
LBS/CAY
4622.44
4917.21
5663.17
1964. 11
4263. CO
7650.00
3978.05
28542. CO
61619.99
CCST
$
233988.19
135355.88
285158.69
28232.90
371721.94
439814.13
201924.63
744644.44
244C839.CC
S/YP
257388. 13
148892.13
313675.94
31C56.33
408895.94
483797.69
222118. C6
819112.56
2684935. CC
TCTAL COST
$
369523.19
229691.44
406072.06
116501.00
388594.00
490071.38
310317.69
848030.81
3158799.00
$/YR
406477.25
252661.69
446681.25
128151.69
427455.25
539080.88
341350.94
932838.06
3474695.OC
TOTAL NATIONAL I\iCCME CCST=J 6
.00
-------
The following three pages contain Tables A-13, A-14,
and A-15 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-13 gives the aggregate
demand schedule for permits from computer run 5. Tables A-14
and A-15 give the market-clearing results for computer run 5
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three
tables are described in more detail in Section 6 of this
report.
A-20
-------
Table A-13
AGGREGATE DEMAND SCHEDULE FOR RUN 5 OF THE MOHAWK PERMIT SYSTEM SIMULATION
ro
ICE OF PERMIT
0.0
257.57
317.16
360.57
373.05
399.71
410. 19
525.02
582.17
596.87
636.5"*
686.23
786.88
827.82
871.34
998.14
1200.71
1214.58
1296.30
1404.81
DEMAND,LB
13624
12912
11741
11612
11545
11413
11345
10291
10051
9987
9881
9733
9410
9188
8952
8127
6776
6684
6158
5245
S/DAY
.00
.00
.34
.87
.2?
.98
.79
.32
.95
• Cl
.13
.99
.92
.34
.81
.80
.79
.31
.23
.38
PRICE OF
1426
1552
1594
1608
1614
1892
1981
2209
2284
2522
2619
3164
3227
3493
2590
3631
4971
5261
6426
7592
8757
PERMIT
.52
.57
.46
.26
.54
.62
.21
.06
.59
.97
.64
.37
.91
.37
.30
.03
.54
.24
.81
.38
.95
DEMANC,LBS/DAY
5176.42
4195.72
3861.94
3752.04
3700.65
2640.16
2433.66
2216.13
2141.01
1903.90
1807.75
1265.94
122C.39
1C58.79
1021.01
1CC5. 13
847.02
838.33
733.00
712.00>
691.00
-------
Table A- 14
RcS?CMSrc H
S ISSUEC= 4000.
MARKET CLEANING P R 1C E = S 1 57 1 . 13
9ICCPRS FCR RUN 5 OF TI-E MOAWK PERMIT SYSTEM SIMULATION
TERM=1C YR S UMT=LBS/DAY BCD
ILICN
FT PLAIN
CAiMAJOHAR IE
LITTLE FALLS
ROME
ST JCH'NSVILLf
UT ICA
ILIPN
FT PLAIN
CANAJGHAR IE
HERKI MER
LITTLE FALLS
ROME
ST JCHNSVILL^
UTIC4
TOTALS
PERMITS EOUGHT
L3S/CAY
601.^2
277 .~>2
655.26
295.35
51^.69
6^6.19
503. C4
451.25
4000.00
LBS/CAY
601.92
277.22
655.26
295.25
514.69
696. 19
508 .04
451.25
40GO.CC
CCST
$
949205. 75
437205.94
1033592.69
465799.94
811731.13
1C97983.00
801244.88
711676.63
6308536. CO
$/YR
154495.94
71153.56
168213.31
75607.19
132106.19
178692. 56
130399.56
115622. 69
1026690.50
TREATMENT
LES/C/SY
4398. C8
49C2.78
5344.64
1914.65
3815.31
7C93.81
3771.96
28378.75
59619.98
LBS/DAY
4398.08
49C2.78
5344.64
1914.65
3815.31'
7093.81
3771.96
28378.75
59619.98
CCST
$
1129744.00
885991.31
1289770.00
8SC76.88
1701C94.00
1983152.00
952269.19
4772551.00
128C3647.CO
$/YR
183861.56
144191.75
209905.19
14496.92
276646.63
322750. 5C
154^78.19
776714.69
2083745.00
TCTAL COST
$
2079049.00
1323197.00
2323362.00
554876.81
2512825.00
3081135.00
1753514. CO
5484227.00
19112176.00
333357. 5C
215345.31
378118.50
90304.06
408952.81
501443.06
285377.75
892537.38
3110435.00
TOTAL NATICNAL INCOME CCST = $ 5 144287.00/YR
-------
Table A-15
R5SPCNSES OF BICCERS FOR RUN 5 OP THF MQhAkK PERMIT SYSTEM SIPLLATICN
NUMBER ISSUE!> 2000. TE^M-IC YRS UMT = LBS/DAY ECC
MARKET CLEARING PR I C E=$242 6 . 36
PPLLUTE3
JLION
FT PLAIN
CAN A jnhA° IE
5" HEPK IMF1?
NJ LITTLE PALLS
w RTME
ST JOHNSVTLLE
UTICA
TOTALS
I LION
FT nj_ A I M
CANAJOHAR IE
HERK I yp*
LITTLE FALLS
ROME
ST JCI-NSVTLLC
UTICA
TOTALS
PERMITS SCUGHT
LBS/CAY
377.56
262.79
336. £2
245.89
47. CO
140. CO
301.^5
2 83. CC
2000.00
L3S/CAY
37^.56
262.19
336.62
245.89
47. CO
140. CO
301.95
288 .CC
2.CO.CO
CCST
$
916C84.C6
637616.44
817256.88
5966C6. 31
114038.75
339689.83
732630.56
698790.69
48521C9.00
$/YR
L49C39.19
103769. 63
133CC5.44
97C95.38
18559. 38
55233. 25
119232. fil
113125.50
739760.13
TREATMENT
LBS/DAY
4622.44
4917.21
5663.17
1964.11
4283.00
7650. CC
3978. C5
28542.00
61619.99
L5S/CAY
4622.44
4917.21
5663.17
1964.11
42E3.CC
7650.00
3978. C5
28542. CO
61619.99
CCST
$
1581530. OC
914874,13
1927393;00
190825.56
2512475. OC
2972710.00
1364612. CC
5033C71.00
16497690. OC
$/YR
257388. C6
148692.31
313675.94
31C56. 14
408895.81
483797.38
222118. CO
819113.33
2684937. OC
TCTAL CCST
$
2497614.00
1552490.00
2744649.GO
787431.88
2626513.00
3312399.00
2097442.00
5731861.CO
21350384.00
$/YR
406477.25
252661.94
446681.38
128151.50
427455.19
539080.63
341350.81
932838.88
3474697.00
TOTAL N^TICNAL IMCC^E CCST=« 6449095.00/YR
-------
The following three pages contain Tables A-16, A-17,
and A-18 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-16 gives the aggregate
demand schedule for permits from computer run 6. Tables A-17
and A-18 give the market-clearing results for computer run 6
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three
tables are described in more detail in Section 6 of this
report.
A-24
-------
Table A-16
AGGREGAT^ OEMANC SCHEDULE ^CR RUN 6 Of THE MOHAWK PERMIT SYSTEM SIMULATION
PRTCi
to
ui
OF PERMIT
0.0
318.83
392.59
34
78
73
76
90
64
84
9?
45
04
72
21
55
446
461
494
507
649
720
738
787
849
974
1024
1079
1235
1486
1503,
31
47
1604.63
1738.95
DEMAND,LB
13624
12912
11741
11612
11545
11413
11345
10391
10C51
9987
9881
9733
9410
9188
8952
8127
6776
6684
6158
5345
S/DAY
.00
.oc
.34
.86
.29
.98
.78
.31
.95
.01
.13
.99
.92
.34
.82
.80
.80
.31
.24
.33
PRICE OF
1765
1921
1973
1990
1998
2342
2452
2734
2828
3123
3242
3917
4008
4324
4444
4494
6154
6512
7955
9398
10841
PERMIT
.83
.86
.71
.79
.57
.80
.45
.50
.00
.08
.74
.04
.06
.30
.27
.69
.04
.66
.47
.28
.09
DFMANC,LBS/CAY
5176.42
4195.71
3661.95
3752.04
3700.65
2640.16
2433.66
2216.13
2141.01
1903.90
1807.75
1265.94
1220.39
1058.79
1C21.01
1C05.13
847.02
838.33
733.00
712.CO
691.00
-------
Table A-17
RESPONSE? "F 3ICDPPS FOR 3IJN 6 CF THE MChAI*K PERMIT SYSTEM SIMULATION
F- issucr;= 4003. TERM-MS Y^S UNIT=LBS/DAY BOD
MARKFT CLFA.RINf, PR I C F = $ 1
-------
Table A- 18
$ rc BICCERS FOR RUN 6 OF THF MCHAV.K PERMIT SYSTEM SIMULATION
ISSUFD= 2000. TERM=15 YRS UMT = LBS/DAY BCD
MARKET CLEANING PR 1C E= $3003 .43
IL I CM
FT PLAIN
CAN AJCHAR IE
^"HEPK I VEQ
M_ITTLE ^ALLS
ST JrHNSVILLF
UTICi
THT<\LS
I LION
FT PLftTN
tP IE
LITTLE FALLS
ST JCHNSV!LL=
UT T C »
TOTALS
PERMITS BCUGHT
LBS/CAY
377.55
?62.79
336, E2
245.89
47. CO
140. CO
301.95
288. CO
? 000 . 00
L8S/TAY
377.55
262.79
336.62
?45.8<;
47. CO
140. CO
301 .95
288. CO
20 CO. CC
CCST
$
1133^79. OG
739282.44
1011C45.75
738512.25
141163.69
420487.56
906891.94
665C03.06
6006962.00
t/YR
149C89.06
10317C.31
133CC5.38
97C95.3B
18559. 39
55283, 30
119232.94
113125.63
789761. G6
TREATMENT
IBS/DAY
4622.44
4917.21
5663.18
1964.11
4283.00
7650. CO
3978.05
28542.00
61619.99
LBS/OAY
4622.44
4917.21
5663.18
1964.11
4263. CG
7650.00
"?978.G5
Z8542.CO
61619.99
CCST
$
1957706.00
1132486. CC
2335846.00
236215.25
311CC80.00
3679788.00
1689440.00
6230217.00
20421776. CC
$/YR
257388. CC
146692.75
313677.38
31C56.23
408895.56
483797. 5C
222117.88
819113.38
2684^38, OC
TCTAL COST
$
2091685,00
1921768.00
3397491. CC
974727.50
3251243.00
4100275.00
2596331.00
7095220,00
26428736.00
406477.06
252663.06
446682.75
128151.56
427454.94
539080.75
341350.81
932839.00
3474699.00
TCTiL NATIONAL INCOME CCST=J 6^49099.00/YR
-------
The following three pages contain Tables A-19, A-20,
and A-21 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-19 gives the aggregate
demand schedule for permits from computer run 7. Tables A-20
and A-21 give the market-clearing results for computer run 7
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-28
-------
Table A-19
AGGREGATE DEMAND SCHEDULE FCR PUN 7 OF THE MOHAWK PERMIT SYSTEM SIMULATION
PRICE OF OFOM
0.0
128.23
128.71
140.89
149.76
162.96
178.25
189.90
216.18
229.96
251.66
323.16
326.49
358.51
359.26
456.45
484.63
524.49
524.65
574.57
DEMAND, IB
12510
11318
11216
11111
10389
10438
10108
9951
9833
9758
9607
9136
- 9117
8756
8746
7426
7C44
6468
6466
5716
S/DAY
.00
.00
.40
.41
. CC
.48
.34
.88
. 58
.35
.91
.57
.14
.81
.00
.50
.41
.39
.41
.41
PRICE OF
589
594
612
634
656
722
737
8C6
830
870
959
1034
1127
" 1216
1222
1343
1708
1709
2106
2502
2901
PERMIT
.75
.38
.10
.46
.82
.81
.21
.31
.26
.73
.24
.18
.98
.96
.75
.90
.29
.11
.47
.83
.20
CEMANC t LBS/C AY
5479.02
5293.86
4586.68
4136.69
3686.69
270C.76
2616.91
2205.68
2C63.15
1953.31
1713. C£
1509.66
1250.55
1C96.Q4
1089.93
Stl.St
837.56
637.49
733.00
712. CO
691. CO
-------
Table A- 20
RcSpr?NSFS Cp EICrERS FC!" RUN 7 HF T^E VCJ-AWK FERfIT SYSTEM SIMULATION
NU^B^v ISSUED 400T. TERVN 5 YR S UMT = LBS/OAY BCD
MAPKFT CLFARIMG °RIC'"-S 641.25
°OLLUTEi<
II. ICN
FT PLAIN
. CANAJOUAR I E
1 HE RK I vet?
o LITTLE FALLS
RO^.E
ST JCHNSVILL-
UTICA
TOTALS
I L ! ON
FT PLAIN
CANAJCHA^IE
HERKIMCR
LITTLE. FALLS
RQMf
ST JOHNSVILL=
UTICA
TOTALS
PERMITS FOUGHT
L3S/CAY
552 .33
265.91
559 .22
276.94
127.76
751. 8C
434. 5£
1031.35
4000. CO
L3S/CAY
552.33
?65.91
559.23
276. 94
127,76
751. SC
434.58
1031 .35
40CO.CC
CTST
$
254161.44
170512.31
35867C.81
177588.63
81929. CC
482C91.94
278675.44
661251.88
2564999.00
$/YR
93432.75
44981.01
94617. C6
46847.74
21612.80
127175.44
73514.31
174464. C6
676644.69
TREATMENT
LBS/DAY
4447.67
4914.09
5440.67
1933. C6
4202.23
7038.20
3845.42
27798.65
59619.99
L3S/DAY
4447.67
4914.09
5440.67
1923.06
42C2.23
7038.20
3845.42
27798.65
59619.99
CCST
$
543272.56
393792.69
622113.81
36314.36
987541.94
867348. 13
461758.75
1627520.00
5539760.00
$/YR
143341.25
1C36S2. 19
164113.13
9579. 7C
26C512.75
228805.69
121811.56
429338.44
1461284. OC
TCTAL COST
$
897554.00
564305.00
980784.63
213902.94
1069470.00
1349440.00
740434.19
2288871.00
8104760,00
$/YR
236774.
148863.
258730.
56427.
282125.
355981,
L95325,
603802.
OC
IS
19
43
50
13
88
50
2138028.00
TOTAL NATIONAL 'NCCM.E CCST = * 5 1147?0 .00/Y R
-------
Table A-r-21
RESPONSES CF BICCERS FCR RUN 7 OF THE MChAWK PERMIT SYSTEM SIMULATION
NUMSER ISSUED- 2000. TERM= 5 Y"S UMT = LBS/OAY 5CC
MARKET CLEARING PR.1C= = $ 35?.5?
POLLUTER
IL ION
FT PLAIN
CANajOHA" IE
H E P K I M E R
LITTLE -ALL?
ST
UTICA
TOTALS
I LION
FT SL
IE
LITTL -- FALLS
ST JCHMSVILL:
UTKi
TOTALS
LBS/CAY
400.57
?56.77
341.56
235.69
47. CC
140. CO
290.20
288.CC
2000.00
L8S/CAY
400.57
256.77
341.56
•>35.r9
4 7 . C 0
1 4 0 . C C
?90.20
zee .cc
2cco.ro
CCST
$
341699.44
219161.88
291531.44
201240.63
40115.67
119493.44
247692. 25
245615.13
1707C48.00
$/YR
90192.75
57£14.73
76C.C5. 75
53113.50
10582.48
31522.27
65H41.02
64P45.83
450317.88
TREATMENT
L8S/OAY
4599.43
4923.23
5658.44
1974.11
4283.00
7650.00
3969.80
28542.00
61620.00
LBS/OAY
4599.43
4923. 23
5658.44
1974.11
4263.CO
7650.00
3969.80
23542. CO
61620.00
CCST
$
656794.13
4CC618.50
784871.69
67695.00
1039961.56
1317482.00
569668.13
2134507. CO
6971596. CC
$/YR
173261.75
1C5682.61
207C48.50
17857.89
274341.00
347550.69
15C278.CC
563C81.25
18391C1.CC
TCTAL COST
$
998693.56
619780.38
1076403.00
269035,63
108C077.0G
1436975.00
817360.38
2380322. OC
8678645.00
263454. 5C
163497.50
283954.25
7C971.38
284923.44
379072.94
215619. OC
627927.06
2289418.00
644R418.03/YR
-------
The following three pages contain Tables A-22, A-23,
and A-24 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-22 gives the aggregate
demand schedule for permits from computer run 8. Tables A-23
and A-24 give the market-clearing results for computer run 8
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-32
-------
Table A-2 2
AGGRFGATF OFMAfsH SCH^OULC PCR RUN 8 OF TH^ MOHAWK PERMIT SYSTEM SIMULATION
u>
U>
p P IC F OF PFR^IT
0.0
144.45
165.93
190.63
195.74
210.77
217.89
270.06
298.70
308.45
337.37
353.96
424.19
430.03
473.15
517.53
619.31
664.3?
685.22
737.54
ND,LB
13624
12 S35
11677
11536
11481
11341
11251
10396
10070
9990
9S61
9776
9383
9351
8941
3419
7213
6700
6462
5766
S/DAY
.00
.71
.23
.60
.13
.47
.70
.26
.32
.84
.31
.67
.26
.57
.52
.64
.04
.50
. 51
.49
PRICE OF PERMIT
780.36
811.70
850.42
852.91
898.61
1020.61
1087.58
1152. 14
1205.02
1324.7C
1392.40
1672.5C
1674.49
1837.70
1880.09
1934.38
2608.03
2729.67
3340.15
3950.64
4561.12
DEMAND,LBS/CAY
5172.98
4738.66
4167.98
4151.59
3483.37
2639.83
2353.25
2237.47
2138.53
1914,63
1787.96
1263.93
1261.61
1067.22
1C36. 19
996.45
845.17
838.16
733.00
712.CC
691.00
-------
Table A-23
NUMbF ^ ISSUEO 4000.
MARKFT CLFAPIN3 OR!CC = $ 363.2£
= 5
8 CF THE TMWK PERMIT SYSTEM SIMULATION
5 UMT = LBS/DAY BQD
POLLUTFF
IL ir\
FT SLAIN
CANAJCHA^IE
^ LITTLE FALLS
*> ROME
ST JQhNSVILL
UT ! C A
TOTALS
IL ION
FT PLAIN
CANAJCKAD IE
HE SKIVER
LITTLE FALLS
ROME
ST JCHNSVILLC
UTTCA
TOTALS
PERMITS
L 3 S /
593 .
274.
631 .
790 .
461.
697 .
490.
560 .
4000.
L3S/
593.
274.
631.
290.
461.
697.
490.
5 60-.
40CO.
ECU
C Av
4?
65
24
86
68
44
" 7
34
GO
CAY
49
65
24
£6
68
44
32
34
CC
CCST
$
512336.44
237096.38
544936. 38
251093.25
398555.94
602C35.63
423235.25
483729. 56
3453116.00
$/YR
171315.13
79280.31
132215. 94
33S60.56
133269. 19
201325. 5C
141538.19
161749.56
1154653.00
TREATMENT
LBS/CAY
44C6.52
4905.35
5368.76
1919. 14
3368.32
7C92.56
3769.68
28269.66
59619.98
LPS/CAY
44C6.52
4905.35
5368.76
1919.14
3868.32
7C92.56
3739.68
28269.66
59619.98
CCST
$
638299.63
492513.88
734456.13
49C23.45
981702.38
11C6675.QC
542592.63
2524863.00
707C124.00
$/YR
213434.75
164666.86
245587.56
16392.47
328261.88
37CC50.25
181432.25
844264.31
2364109. OC
TCTAL COST
$
1150636.00
729610.25
1279392.00
300116.69
1380258.00
1703760.00
965877.88
3003592.00
10523241.00
$/YR
384749.88
243967.19
427803.50
100353.OC
461531.06
571375.75
322970.44
1006013.88
3518762.00
TOTAL NATIONAL INCCM- CCST=S 5 133823,03/YR
-------
Table A- 2 4
MARKE
RFSPONSFS CF BUTTERS FOR PUtJ 8 OF THE MOAkK PERPIT SYSTEM SIMULATION
ISSUED^ rOOC. T£RM= 5 YRS UMT = LBS/DAY BCD
CLOSING ^ 1C E= * 1279 .07
POLLUTED
IL ITN
FT PLAIN
CAN AJHHAF I E
HERK IWTR
LITTLE FALLS
ROVE
ST JCHNSVILL?
UTIC A
TOTALS
ILIHN
FT PL"T N
CANAJOMA3IE
H p DX I M c ft
LTTTL'E F^LLS
qriwc
ST J'-HNSVILL?
UTtr A
TCT4LS
MITS BTL'GhT
L 35 /CAY
382.51
261 .50
337.73
243 .61
47-. CC
140 .CC
299 .45
238. CC
2000 .CO
L3S/TAV
392. 51
261. CC
337.72
243. 61
47. CC
140. CO
2?* .45
288 .CC
2CC3. CC
CCST
$
489251. 25
334477.25
431S79.00
211655. 5C
60116.15
179C69. 38
383C14.38
366371. 31
2558132.00
$/YR
163595.94
111642.56
144445. 19
104278.31
20101.65
59877. 26
128C72.44
123 176.06
355388.81
TREATMENT
LBS/DAY
4617.49
4918. 50
5662.27
1966.19
4283.00
765C.CO
3960.55
28542.00
61619.99
LBS/OAY
4617.49
4918.50
5662.27
1966. 19
4263.CC
7650.00
398C.55
28542.CC
61619.99
CCST
$
864237.19
506593.56
1048657. OC
100835.25
1372304. CC
1650420.00
747C52.C6
2764779. CC
9055127. CC
$/YR
289COC.56
169394.66
350717. 06
33717.31
458671.31
551667.81
249799.44
924487.44
3027655. CC
TCTAL COST
$
1353538.00
841070.81
1480836,CC
412690.75
1432420.00
1829489.00
1130066.00
3133150.00
11613259.00
$/YR
452596.5C
• 281237.44
495162.25
137995.63
478972,94
611745.06
377871.88
1047663.50
3883243.OC
TOTAL NAT1CNAL 1N)CCM.E CCST=t 6 448 779 .00/YP
-------
The following three pages contain Tables A-25, A-26,
and A-27 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-25 gives the aggregate
demand schedule for permits from computer run 9. Tables A-26
and A-27 give the market-clearing results for computer run 9
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-36
-------
Table A-25
AGGREGATE DEMAND SCHEDULE CCR PUN 9 OF THE MCHAWK PERMIT SYSTEN SIMULATION
PRICE
U)
gp PERM]!
1.00
158.90
195.66
222.45
230.14
246.59
253.06
3?3.90
359.16
368.23
392.7C
423.36
485.45
510.71
5^7.87
615.78
740.76
749.31
7°9.73
366.67
0£MANC,LPS/DAY
213619.5C
1417C.64
12763.52
12511.96
12414.32
12225.05
12136.13
11C08.79
10 6 C 8 . P1
10530
PRICE
10390
10206
9822
9579
9324
.8452
7046
6951
64C8
5576
.16
.44
.41
.91
.95
.65
.59
.79
.22
.32
.14
OF PERMIT
380.07
957.83
983.68
992.19
996.06
1167.62
1222.27
1362.84
1409.44
1556.5C
1616.14
1952.21
1997.57
2155.16
2214.97
2240.1C
3067.10
3245.83
3964.91
4683.93
54C3.06
DEMAND,LBS/DAY
5403,68
4404.52
4C65.26
3953.61
39C1.44
2811.44
2597.29
2262.8£
2282.91
2C32.4C
1931.50
1368.39
1320.51
1151.59
1111.30
1C94.41
912.23
899.95
783.44
754.7C
728.02
-------
Table A-26
F-ESPQNSES TF BIDDERS
NUMB-' ISSLIC:D = 4000.
ET CLEAk p-n :>eiCE=$ 933.65
9 OF THE wCHflVvK FESfIT SYSTEN SIMULATION
TCRM= 5 YRS UNIT = LBS/DAY BOD
u>
oo
CCLLUTEP
IL ICN-
FT DL A T\
CANAJCHAS jc
Hppk'IVEB
LITTLE FAILS
ROMC
ST JTI-NSVILLE
UTICA
S.C.U.M.
TOTALS
ILICM
FT PLAIN
CANAJOHAP IE
LITTLF FALLS
RQMP
ST JCHKSVILLE
UT1CA
S.C .U.M.
TOTALS
P'RMITS ECUGHT
L9S/C&Y
500.35
21 b. ie
645 .PA
2S4. 13
477. C5
661.24
5G! .88
340 .44
202. "C
4000 .CC
L8S/CAY
600.25
276.78
645. 64
?94. 1?
477.C5
661.24
501 .?<*
34C .44
2C2. ~C
4000 .CO
CCST
$
593539. CO
273642. 31
6^8506.38
290738. 25
471622.94
653733.44
496180. 19
336573.6?
199=99.94
3954593.00
$/YR
156575.06
72156.63
168437.56
76709.69
124416.36
172454. 31
13CS91.94
? 3 78 7. 81
52759.32
1043213.50
TREATMENT
LBS/DAY
4399.64
4903.21
5354. 16
1915.37
3852.95
7128.76
3778.12
28489.56
0.0
59822. 28
LBS/DAY
4399.64
49C3.21
5354.16
1915.87
3652.95
7128.76
3778. 12
284G9.56
0.0
59822.28
CCST
$
6985C8.81
547C21.56
8C5C42.CC
56150.47
1086378. CC
1-25775C.CC
593528.94
3053C27.CC
0.0
80974C5.CC
$/YR
184266.C6
1443C3.81
212369.44
14612.45
286585.62
321793.44
156572.44
805386.06
0.0
2136CS9. CC
TOTAL CCST
$
1292047.OC
820663.88
1443548.00
346938.69
1558010.00
1911483.OC
1089709.00
23896CO.OC
199999.94
12051997.00
$/YR
34C841.13
216490.44
380807.00
91522.13
411002.00
504247.75
287464.3€
894173.88
52759.82
3179307.00
TCTAL NATIONAL INCOME COST=f 5269251.0C/YR
-------
Table A-27
S !5SUFC =
MARKET CLEARING
CF SICCEPS FOP RUN 9 OF THE yCHAWK PERMIT SYSTEM SIMULATION
TERS* = 5 YRS UNIT=LBS/DAY BCD
!CE=$1575.6
FT PLAIN
CAN . ijrn.AR I E
LITTLE FALLS
ST JP
UT !CA
S.C .U.w.
TOTALS
FT DL M ^
CANAJTHAC IE
HE^KI^ER
llTTLf: FALLS
ST
DTK A
S . 0 . u . M .
"ITS FCUOM
L^S/TAY
260.62
233 .^4
234.66
4 ? . C C
140.00
27C.97
23R.00
126.c2
L?S/rAY
3 4 ? . P 5
"60 .6 2
2 P 8 . 9 4
234.66
47. CC
CCST
$
540205. 56
4] 0645.00
455272. 25
369737.13
74C55.69
220591.44
42 6 9 50. C6
45378S. 13
]_ 9g cqg ,04
3151242.00
$/YR
142.505.75
108327. 81
120100.44
97536. '1
19535. 83
58191.34
11262C.C6
119708.94
52759.82
631295. 13
TREATMENT
L6S/D£Y
4657. 15
4919.38
5711. C5
1975.34
42F3.CG
7650.00
4CC9.03
23542.00
0.0
61746.96
LBS/CAY
4637. 15
4919.38
5711.05
1975.34
4283.00
7650.00
4CC9. C3
28542.00
O.G
61746.96
CCST
$
1C29C23.C6
567746.13
1262632. OC
134978.19
1550027.00
1833961. OC
889590.19
31C5C67.CO
0.0
10373C24.00
$/YP
271455.44
149770.94
333C81.31
356C7.14
408S95.88
483797.44
234673.13
819114.19
C.C
2736395. OC
TOTAL COST
$
156^5228.00
978391.12
1717904.00
504715.31
1624082.00
2054552.CC
1316540.00
3558855.00
159999.94
13524266.00
t/YR
413961.19
258098.75
453181.75
133143.44
428431.69
541989.25
347302.19
938823.13
52759.82
3567690.00
TOTAL NATIOML
M C H '•"
7 .
-------
The following three pages contain Tables A-28, A-29,
and A-30 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-28 gives the aggregate
demand schedule for permits from computer run 10. Tables A-29
and A-30 give the market-clearing results for computer run 10
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-40
-------
Table A-28
AGGREGATE DEMAND SCHE^ILE FCR RUN 1C CF THE PCHAKK PERMIT SYSTEN SiyUL4TICN
PRICE OF PERMIT OFFEND,LBS/DSY PRICE OF PERMIT DEMANDtLBS/CAY
1.00 1C13619.50 880.07 6312.7C
158.90 19205.18 957.8? 5239.73
195.66 16852.15
-------
Table A-2 9
B!C"r'S KIP RUM 10 OF THE fCHAVvK PERMIT SYSTEN SIMLATICN
T^M = c YRS UMT=L6S/DAY BOD
°CLL'JT!:;3
TLIOk!
FT PLAIN
CAMAJPHAP IE
Ht^K I^Et.
LITTL- FALLS
ST
UTICA
S.C.U.M.
IL
FT PLAIN
C AN A J CHAR IE
LTTTLt
ROME
ST JCM
UTICA
S.C.U.M.
TOTALS
L3$
3 SO
-i 3 r
"M*
•-+21
+ 59
'23fi
912
LBS
554
273
5 8 0
285
218
421
459
9 Q3
c i ->
!.. •_ !_•
c ^
» V. «_
.49
. 76
.79
* *H H
.6C
• V- '. -
1 "^
• J, \J
.19
.«2
.49
. 16
. 70
. 44
.60
.00
-a .-i
3994.?9
CCST
*
607462. 13
300146. 56
636292. 50
313230. 5C
2398.20. 38
461C5Q.50
503773.13
315635.00
999C9<3. 81
4378363.00
$/YR
160243.00
79 173. 38
167£53.44
82629.94
63264.42
121662.13
132896.25
33277.44
263799.13
1155COff .00
TPE^TMENT
LBS/DAY
4445.81
49C6.18
5419.51
1924.24
4111.21
7368.56
382C.40
28542.00
G.C
6G537.90
L3S/CAY
4445.31
49C6.18
5419.51
1924.24
4111.21
7368.56
3820.40
28542. CO
0.0
60537.90
CCST
$
7466S1.5C
550107.81
873159. 5C
64371.10
1355583. CC
1507715.00
6376CC.19
3105C67.CC
0.0
884C794.CC
$/YR
196976.63
145118. CC
230338.75
17112.94
3516C1.69
397734. GC
168198.38
819114.19
0.0
2332194. CC
TCTAL COST
$
1354153.OC
850254.38
1509452.CC
378101.56
15954C3.00
1969665.00
1141378.00
3420752.CC
999999.81
13219157.OC
$/YR
357224.63
224296.38
398192.19
99742.86
420866.06
519596.12
301094.63
902391.63
263799.13
3487202.CC
TOTAL KATTON&L
5 7 CC 793 . CO /Y"
-------
Table A- 30
RESPjNSFS TF BIDDERS FOR RUN 10 OF THE
!SSU^T= ?ODO. T
-------
The following three pages contain Tables A-31, A-32,
and A-33 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-31 gives the aggregate
demand schedule for permits from computer run 11. Tables A-32
and A-33 give the market-clearing results for computer run 11
when the supply of permits is set at 1,000 and 500 pounds per
day of BOD respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-44
-------
Table A-31
AGGREGATE DEMANC SCHEDULE FOR RUN 11 OF THE MOHAWK PERMIT SYSTEM SIPUL4TICN
PRIC^ OF PESfIT DEMANDf LBS/CJY
C.O 10180. CC
97.40 5225.42
137.89 4554. 7C
253.06 1987.76
368.23 1262.74
423.36 1071.82
*f 749.31 907.64
*> 992.19 876.69
01 1616.14 584. 5C
1997.57 405.89
224C.1C 287.21
3245.83 238.33
3964.91 133. CC
4S£^.98 112. CO
54C2.C6 91.00
-------
Table A-32
RESDON?ES rF BIDDERS FOR RUN 11 OF THF VOHAkK PERMIT SYSTEM SINULATICN
ISSUp:D= 1000. TPRM= 5 YRS UNIT = LBS/OAV BOD
MARKET CLEARING DRICE=* 565.94
PnLLUTER
> I LION
^ FT PL AIM
w TOTALS
! L I ON
FT PLAIN
TOTALS
PERMITS DCL'GHT
LBS/CAY
642.58
357.42
1000.00
LBS/CAY
642. 58
357.4?
1000. CO
CCST
*
363662.00
2022SO.C6
565942.06
$/YR
95933.69
5??61.?2
149295.06
TREATMENT
LBS/DAY
4357.42
4822.58
9180.00
. LBS/DAY
4357.42
4822.58,
' 9180. CO
CCST
$
665689.13
492599.69
1158288.00
$/YR
175608.25
129947.38
305555.44
TOTAL COST
$
1029351.13
694879.75
1724230.00
$/YR
271541.94
183308.69
454850.50
TOTAL NATIOMAL INCOME COST=$
786952.63/YR
-------
Table A-33
RESPONSES OF 3IDDERS FOP RUN 11 OF THE MCHAWK PERMIT SYSTEM SIMULATION
ISSUED 500.
MARKET CLEANING PP 1C E= $1796. f 0
YRS
UNIT = LBS/DAY BOD
POLLUTE
> TLICN
1 FT PLAIN
'-4 TOTALS
ILICM
FT PLAIN
TOTALS
PERMITS FCUGHT
LBS/CAY
245.47
254.53
5CO.CC
LRS/rAY
245 .47
254. 53
500. CO
CCST
$
441C04.CO
457296.61
6982CO. 81
J/YR
116226. 50
120634.50
236=71. CO
TREATMENT
LBS/CAY
4754.53
4925.46
9630.00
LBS/CAY
4754^. 53
4925.46
968C.OO
CCST
J
1193214.00
578C06.69
1771220.00
f /YP
314768.88
152477. 6S
467246.28
TOTAL COST
$
1634218.00
1035303.50
2669521.00
$/YR
431105.38
273112.15
704217.38
TOTAL NATIONAL
CCST=S 1 1 1 6 5 2 1 .CC / YR
-------
The following three pages contain Tables A-34, A-35,
and A-36 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-34 gives the aggregate
demand schedule for permits from computer run 12. Tables A-35
and A-36 give the market-clearing results for computer run 12
when the supply of permits is set at 70,000 and 35,000 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-48
-------
Table AT34
AGGREGATE -DEMAND SCHFOULF FOR RUN 12 OF THE MCHAWK PERMIT SYSTEM
>
PRICE OF PERMIT
0,0
50.25
60.26
68.41
71,41
74.12
75.53
80.10
83.09
83.36
89.77
89.79
91.20
95. C8
100.85
105.26
124.45
127.01
129.53
130.06
151.81
160.27
175.44
200.77
212.42
221.31
AK'D ,Lfi$/ D AY
117802. CO
94177.31
90223.25
86483. 5C
84324.13
80625.75
78071.81
68926.44
61857.46
61336.45
44989.68
44952.24
42255.76
39313.80
36866.91
34913.70
33429.91
29032.05
28469.30
28441.09
27458.90
27197.79
26566.35
25205.71
24466.49
23772.27
PRICF OF PERMIT
239.68
241.26
266.95
268.97
276.57
281.76
289.58
294.21
316. 7C
378.55
417.26
448.15
47C.06
489.38
535.79
538.32
663.55
677.36
689.18
693.03
704.46
707.21
7C9.97
712.73
759.94
906.58
1135.79
DEMAND ,L6 S/DAY
22548.64
22437.91
20637.44
2C495.52
19985.09
19638.47
19375.35
19223.25
16978.22
18327.80
17915.22
17690.39
17537.18
174C2.C8
17077.54
17C59.83
16184. C9
16115.95
16C57.35
16045.94
16C25.89
15902.20
15799.87
15697.54
15614.91
15545.50
15437. CC
-------
Table A- 3 5
PESPON'SES i~F 3ICDERS FOR RUN 12 OF THE MCHAfcK PERMIT SYSTEM SIPULATICN
S ISSUPr>= 7CCOO. TCPM= ^ YPS UMT = LBS/DAY BP
MARKET CLEAPlNiG »RICE=$ 79.56
I
PCLLUTEF.
FT PLAIN
ILICN
CANAJCHARIE
HERKIMER
LITTLE FALLS
ST JCHNSVTLL
UTICA
TOTALS
FT PLAIN
TLITN
CANAJCHAR
LITTLF FALLS
ROMP
ST JGHK'SVILLE
UTICA
TOTALS
PERMITS ECUGHT
L1S/C/5Y
4517,£8
4 5 76. C 2
7126.72
2535.73
7667.00
16171. 13
7164.00
20191.55
70000.CO
L3S/TAY
4517.fc6
4576 .C3
7126.72
2585.73
7667.CC
16171. 13
7164. CO
20151.59
70CCC.CC
CCST
$
359449.13
364C76. 21
567C13.56
205724.69
609999.25
1236601.00
569S79.69
1606476.00
5569218.00
WYR
94822.50
96C43.CO
149577.69
54270.01
160917.31
339404.31
15036C.19
423 /87.C6
1459181.00
TREATMENT
LBS/OAY
12771.13
14411.97
12432.28
5127.27
65 51. -CO
14880.88
7C47.CO
85197.38
156878.88
LBS/DAY
12771.13
14471.57
12432.28
5127.27
6551.00
14880.88
7C47.CO
85197.38
158878.88
CCST
$
676679.94
946879.81
772501.69
52243.09
536581.25
414734.75
458657.88
12925C2.00
5154217.00
$/YP
175C35.15
245786.13
2C3£9G.81
13781.68
141655.19
1C54C6.69
i2iC56.ee
341C66.50
1355678. OC
TOTAL COST
$
1038129.56
1310956.00
1339915.00
257967.75
1146980.00
1701335.00
1028877.56
2899378.OC
10723537.00
$/YR
273857.69
345829.13
353468.5C
68051.69
302572.50
448811.CC
271417,06
764853.56
2828859.CC
TOTAL NATIONAL INCfMt CCST=J
•80758.CO/YR
-------
Table A-36
"ESPOUSES OF BICCERS FOR RUN 12 CF THF MCHAfcK PERMIT SYSTEM SlfULATICN
NUMBER ISSUFO= 35000. T = RM= 5 Y&S UN IT = LBS/DAY BP
MARKET CLEARING PRICE=$ 105.C7
POLLUTER
FT PLAIN
ILICN
CANAJHHARIt
HER*THE0
LITTLE FALLS
ROME
ST JCHNSV1LLF
UTICA
TOTALS
FT PLM?11
ILICM
CANAJCH4RI=
PERK!ME"
LITTLE FALLS
ROME
ST JCt-NSV 1LLE
UTICA
TOTAL?
PERMITS POUGHT
L3S/CAY
18C2.C1
225°.55
2387.51
2164.72
7584.70
6549.25
1716.52
10536.73
35000.Cl
LBS/CAY
1802.Cl
225G.EE
2337.51
2164.72
7584.1C
6549.25
1716.52
10536.73
35000.Cl
CCST
$
139330.69
237257.81
250647.75
227441.00
796897.50
688106.50
180348.75
1107C57.00
3677325.00
$/YR
49945.29
62598.97
S6173.44
59S98.75
21C22C.88
181521.94
47575.86
292C40.75
970C75.38
TREATXENT
LBS/DAY
15486.99
16789.45
17171.48
5548.26
7C33.30
24502.75
12494.48
9^852.25
193£78.88
LBS/DAY
15486.99
167C9.45
17171.48
5548.26
7033.30
24502.75
124S4.48
94852.25
193878.88
CCST
$
9C9371.75
1136C05.00
11747C9.0C
91106.38
545454.88
1251872.00
936236.25
2184182. CC
8228935.00
$/YR
239891. 5C
299677.19
3C9687.25
24C33.79
143890.56
330242.81
246978.38
576185.44
217C766.CC
TOTAL COST
$
1098702.00
1373302.00
1425556.00
318547.38
1342352.00
1939978.00
1116585.00
3291239.OC
11906261.00
$/YR
289836.75
362276.13
376060.69
84032.50
354111.44
511764.75
294554.19
868226,19
3140861.CO
TCTAL NATIONAL
^E CCST=$ 5040 1
OC /YR
-------
The following three pages contain Tables A-37, A-38,
and A-39 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-37 gives the aggregate
demand schedule for permits in computer run 13. Tables A-38
and A-39 give the market-clearing results for computer run 13
when the supply of permits is set at 70,000 and 35,000 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-52
-------
Table A-37
AGGREGATE CFMANC SCHEDULE FCR PUN 12 OF THE MOHAUK PERMIT SYSTEV SIfULATICN
ui
CJ
PRICE OF PERMIT
0.0
324.53
341.42
358.31
375.25
440.56
480.76
482.84
499.56
500.87
502.42
503.93
505.88
516.29
532.81
535.60
535.72
528.64
590.45
591.89
622.35
655. 8.7
667.50
694.30
706.07
732.73
753.C6
964.11
1076.63
1195.48
DEMND,LBS/OAY
166886.00
161853.19
128617.69
119813.38
119635.63
110797.6?
106882.88
1C6380.00
92749.38
91991.31
S1E77.63
73022.94
71918.31
66796.31
64C36.36
56647.10
56538.95
50952.53
41298.69
41364.16
40£47.15
40133.95
'37907.66
33C35.02
31669.95
28746.34
28595.55
27570.95
27263.07
26^26.95
PRICE OF
1302
1358
1520
1794
1832
1925
1934
2014
2015
2074
2128
2164
2214
2262
2385
2727
2821
3159
3347
3364
2622
4123
43C4
47C1
4712
4769
5080
5424
5449
6593
6676
PERMIT
.55
.08
.68
.96
.81
.78
.90
.65
.92
.83
.35
.14
.77
.05
.75
.41
.85
.74
.58
.34
.21
.01
.38
.76
.76
.38
.28
.17
.03
.67
. 11
DEMANOtLBS/DAY
26538.42
26281.68
25516.00
25158.34
24749.38
23757.75
23658.C6
22807.10
22787.42
21656.80
20853.40
20450.7C
19651.30
19358.84
18593.75
18132.23
18038.33
17674.28
17466.65
17448.13
17163.09
16609.52
16409.05
15975.56
15963.56
15918.48
15758.23
15647.73
15643.29
15443.57
15437.QC
-------
Table A-38
RESPONSES PF BICCERS FOR RUN 13 GF THE MCFAMK FEPMT SYSTEM SIMULATION
EP ISSUEC= 70000. Tcf>M=25 YRS UNIT=LBS/DAV 8P
MARKET CLEANING PSICE=$ 509.78
ui
POLLUTER
FT DLAIN
IL ION
CANAJOHARIE
HFRK1MEP
LITTLE FALLS
ROME
ST JCI-NSVILLC
UTICA
TOTALS
FT PLAIN
ILIC'N
CANAJOHARIF
HERKIMFR
LITTLE PALLS
ROME
ST JOHN SV RLE
UTICA
TOTALS
PERMITS ECUGHT
L8S/CAY
1486.C8
1865.68
6139.C?
2370.6C
14318.96
19022.22
14174,'C
10623. 19
700CO.CC
L8S/CAY
i4S6.ce
1865.68
6139.02
2370.£C
14318.
-------
Table A-39
RESPONSES PF EICCEP.S FOR SUN 13 OF THE MCI-AWK PERMIT SYSTEM SIMULATION
NUMBER ISSUC0= 35000. TERM=25 YRS UNIT=LBS/DAY 3P
MARKET CLEANING PP.ICE=$ 693.49
POLLUTED
FT PLAIN
ILICM
CANAJHHARIF
HERK I WE P
LITTLE FALLS
ROME
ST JOhMSVILLE
UTICA
TOTALS
PERMITS
LSS/
1447.
1864.
1903.
1349.
9514.
6300.
1541 .
10574.
35000.
BPUGHT
HAY
ffc
€1
14
77
18
GC
.29
1C
04
CCST
f
989599.
1274447.
1304198.
12642C1.
6502667.
4306CC2.
1053531.
7227318.
23922256.
25
CG
00
CO
00
00
00
00
GO
TREATMENT
L8S/OAY
15341.14
171€3,39
17650.86
5663.23
5103.82
24752.00
12669.61
94814.86
193878.88
FT DLflIN
I L IC N
CANAJQHARIE
HERKIw£R
LITTLE FALLS
ROM?
ST JPt-NSVILLE
UTILA
TOTALS
LBS/CAY
1447.86
1864
19C8,
1849.
9514.:6
6300.00
1541 ."9
10574.1C
35000 .04
.61
, 14
.77
CCST
$
6534061.00
8625232.00
8864987.00
7C0316.50
3286463.00
9338505.00
6827980.OC
14356243.00
58533728.00
$/Y«
34
-------
The following three pages contain Tables A-40, A-41,
and A-42 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-40 gives the aggregate
demand schedule for permits from computer run 14. Tables A-41
and A-42 give the market-clearing results for computer run 14
when the supply of permits is set at 70,000 and 35,000 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-56
-------
Table A-40
AGGREGATE DE^ANC SCHEDULE FOR RUN 14 OF THE MOHAWK PERMIT SYSTEM SIMULATION
ui
PRICE OF
0.0
44.99
47.C2
50.25
58.47
59.73
60.26
65.12
68.41
71.41
74.12
75.53
77.25
80.10
83.09
83.36
89.77
89.79
91.20
95.08
100.85
105.26
124.45
127.01
129.58
I TO.06
151.81
160.27
175.44
OFF0NO,LB
166886
136637
134147
130913
121781
119810
118628
109C09
101315
94455
83300
85181
81 C 3 2
73608
65E64
65332
4748S
47447
44533
40616
36866
34913
33429
29C32
28469
28441
27458
27197
26566
S/DAY
.00
.69
,26
.75
.63
.88
.25
.56
.50
.63
.88
.06
.63
.75
.86
.24
.20
.74
.67
.95
.91
.1C
.91
.05
.3C
.09
.9C
.79
.35
PRICE OF PERMIT
200.77
212.42
221.31
239.68
241.26
266.95
268.97
276.57
281.76
289.58
294.21
316.70
378.55
417.26
448.15
470.06
489.38
535.79
538.32
663.55
677.36
689.18
693.03
704.46
707.21
709.97
712.73
759.94
906.58
1135.79
DEMAND,LBS/OAY
25205.71
24466.49
23772.27
22548.64
22437.91
20637.44
2C495.52
19985.09
19638.47
19375.35
19223.25
18978.22
18327.80
17915.22
17690.39
17537.18
174C2.C8
17077.54
17C59.83
16184.09
16115.95
16057.35
16045.94
16C25.89
15902.20
15799.87
15697.54
15614.91
15545.50
15437.00
-------
Table A- 41
?CSPGKSC? HF RirrPps CQR RUN 14 GF THE MOAWK PERMIT SYSTEM SIMULATION
ER ISSUEO 70000. T = PM= 5 YP S UMT = LBS/DAY BP
MARKET CLEARING DRICC=S 81.49
FT PL^TM
I LION
CANiJCHARIE
> HERKTMER
' LITTLE FALLS
oo ROME
ST
UT If A
TOTALS
FT PLAIN
TLION
CANAJCHARIE
HFRKIMEP
LITTLE FALLS
ROME
ST JCHNSVILLE
UTICA
TOTALS
°ERMITS ECUCHT
LBS/CAY
40 15. c, 9
3335.9^
62?8 .69
2553.86
12034.P2
15701.27
6658.55
19460.71
70000.06
LSS/CAY
4015.cc
3335.SS
6238.E9
2553.66
12034.8^
15701 .27
665S.55
19460.71
70000.C6
CCST
$
327272.63
271S57.00
503422.06
?08119.88
980746.81
1279533. CC
542620.81
1585699.00
5704468.00
WYR
36334.25
71715.63
134121. 31
54901.86
258720. 19
237539.75
143142.94
418258.88
1504E34. CO
TREATMENT
LBS/CAY
13273.01
15712.02
13320.11
5159.14
2533.17
15350.73
7552.45
85928.25
158878.88
LBS/DAY
13273.01
15712. C2
1222C.11
5159.14
2563.17
1535C.73
7552.45
85928.25
158878.88
CCST
$
719C95.00
1046737. C6
844395.81
548C9.24
• 138753.38
452571.13
499736. CC
1351757.00
51C7853.CO
$/YR
189696.69
276128.28
222750.94
14458.66
366C3.C2
119387.88
131€2<5.94
356592.38
1347447. OC
TOTAL COST
$
1046367.63
1318594.00
1352817.00
262929.15
1119500.00
1732104.00
1042356.81
2937656.00
1C812323.0C
$/YR
276030.94
347844.CC
356872.25
69360.50
295323.IS
456927.63
274972.88
774951,25
2852281.00
TOTAL NATIONAL INCOMC CGST-=$ 350 5342.00/YR
-------
Table A-42
S CF BIDDERS FOR RUN 14 OF THE VCHAKK FERMT SYSTEM SIMULATION
NUMBER TSSUPH= ?5000. TFR^= 5 YRS UNIT=LBS/DAY BP
MARKET CLtARIMG PRICE=S 105. C7
PCLLUTFP
FT PLAIN
ILION
CANAJChAR Ic
> HERKIVER
in LITTLE FALLS
^ ROME
ST JCHNSVILLC
UTKA
TOTAL?
FT PLAIN
!L IrN
CANAJCHARIE
H F R K I M P R
LITTLE FALLS
RCMF
ST JOI-NSVILLC
UT1CA
TOTALS
^c^MITS PCUGHT
LBS/DAY
1802.C1
2258.55
2387.51
2164.73
7584. 7C
6549.25
1 716. 52
10536.72
35000.01
LBV CAY
1802. C!
2?58.55
2287.51
2164.73
7534.70
6549.25
1716.52
10536.7^
350CO.C1
CCST
$
139230.69
237297.81
25C647.75
227441.00
796E97.50
688106.50
180348.75
1107C57.CC
3677325.00
$/YR
49945.29
62593.97
66173.44
59998.75
210220.88
181521.94
47575.86
292040.75
97CC75.38
TREATMENT
LBS/DA-y
15486.99
16789.45
17171.48
5548.26
7033.30
245C2. 75
12494.48
94852.25
193878.88
LBS/DAY
15486.99
16789.45
17171.48
5548.26
7C23.30
245C2.75
12494.48
94852.25
193676. 88
CCST
$
909371.63
1136CC5.CC
1174708.00
91106.38
545454.75
1251872. CC
936236.13
2184182.00
8228934. CO
$/VR
239891.50
299677. 19
3C9fl87.0C
24033.79
14?£9C. 5C
330242.81
246978.31
576185.44
217C786.CO
TOTAL COST
$
1098702.00
1373302.OC
1425555.00
318547.38
1342352.OC
1939978.00
1116584.CC
3291239.00
11906259.OC
$/YR
289836,75
362276.13
376060.44
84032.50
354111.38
511764.75
294554.12
868226.IS
3140861.00
TOTAL NATIONAL INCQMP COST=$ 5C40ii8.co/YR
-------
The following three pages contain Tables A-43, A-44,
and A-45 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-43 gives the aggregate
demand schedule for permits from computer run 15. Tables A-44
and A-45 give the market-clearing results for computer run 15
when the supply of permits is set at 70,000 and 35,000 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-60
-------
Table A-43
AGGREGATE DFMANC SCHECULE FfR RUN 15 OF THE MOHAWK PERMIT SYSTEK SIMULATION
PRICE
OF PERMIT
0,0
81.45
68
38
75
15
97.
110.
115.
120.
122.
129.
134.
135.
145.
145,
147,
154,
163,
170,
201,
205,
210,
210,
246,
259
284
325
344
83
68
13,
52
55
83
11
48
62
73
88
,03
, 82
,07
.79
, 33
.43
.32
358.72
DEMAND,LB
117802
94177
90223
86483
84324
80625
78C71
68926
61E57
61386
44989
44952
42355
39313
36866
34913
33429
29C32
28469
23441
27458
27197
26566
252C5
24466
T3772
S/DAY
.00
.31
.25
.50
.19
.75
.75
.56
.47
.64
.19
.73
.78
.°0
.68
.90
.04
.29
.09
.89
.78
.34
.70
.46
.24
PRICE OF
388
391
432
435
44E
456
469
476
513
613
676
726
761
793
868
872
1075
1097
1117
1123
1141
1146'
1150
1155
1231
1469
1841
PERMIT
.51
.07
.70
.98
.31
.71
.38
,89
.34
.60
.34
.42
.93
.25
.47
.57
.56
.96
.11
.34
.87
.34
.81
.28
.80
.49
DEMAND,IBS/DAY
22548.63
22437.91
2C637.42
20495.50
19985.09
19638.49
19375.35
19223.25
18978.22
18327,£C
17915.22
17690.39
17537.16
17402.08
17C77.54
17C59.83
16184.09
16115.94
16057.34
16C45.93
16C25.88
159C2.2C
15799.87
15697.54
15614.91
15545.50
15437.CC
-------
Table A- 4 4
RESPCNSFS f-F 8IGCERS FOR RUN 15 OF IMF
NUMBER ISSU^D^ 7000C. T°ERM=10 YPS
MARKET CLEARING PRICE=$ 128.96
PERMIT SYSTEM SlfULATICN
UMT=LBS/DAY BP
I
en
PCLLUTEP
FT PLAIN
ILICM
CANAJOHAR IE
LITTLE FILLS
POMP
ST JCt-NSVILLE
UTICA
TOTALS
FT PLAIN
IL ION
CANAJHHARIF
(-ERK IMER
LITTLC FALLS
ROME
ST JONSVILLE
UTICA
TOTALS
PFRMITS ECUGHT
L3S/CAY
4517.68
A-576 .CC
7126.73
2585.72
7667.00
16171 . 13
7164.CO
20191.59
70000.CO
LBS/CAY
4517.£8
4576.CC
7126.7?
2585.73
7667.CO
16171. 13
7164.00
20191.59
70000.00
CCST
$
582640.75
590136.75
919C86.5C
333463.88
983761.94
2 085482. -00
923£93. 38
2603975.00
9C27437.CO
$/YR
943?2.56
96C42. 50
149577.88
54269.99
160917.25
339404. 31
15036C. 13
423787.13
1469181.00
TREATMENT
LBS/DAY
12771.12
14472.00
12432.27
5127.27
6951.00
14880.87
7C47.CO
35197.38
158873.88
L6S/CAY
12771. 12
14472.00
12432.27
5127.27
6951.00
14880.87
7C47.CO
851S7.38
156878.88
CCST
$
1100C87.0C
1534822.00
1252S13.0C
84682.06
8704C5.56
672253. OC
743838.50
2095696.00
8354596.00
$/YR
179C35.0C
249786.50
2C3690.56
13781,69
141655.19
1C94C6.63
121C56.88
341C66.63
1359679. CC
TOTAL COST
$
1682727,CC
2124958.00
2171899.00
418145.94
1859167.00
2757735.00
1667731.00
4699671.00
17382032.00
$/YR
273857.56
345829.00
353468.44
68051.63
302572.44
448810.94
271417.00
764853.75
2828860.CO
TOTAL KATICNAL INCOME COST= ! 3580759 .CC/YR
-------
Table A-45
RESPONSES CF 8ICCEPS FOR RUN 15 OF THE MCf-AWK PERMIT SYSTEM SlftLATION
NUMBER ISSUED 35000. TE3M=10 YRS UN1T = LBS/DAY BP
MARKET CLEARING PRICr=$ 170.30
CTl
U>
POLLUTER
FT PLAIN
ILICNi
CANAJGH4R I c
HERKIMFR
LITTLE FALLS
ROME
ST JCHNSVILLF.
UTICA
TOTALS
FT PLAIN
ILICN
CANA.JCHARIF
HfRKIi'FR
LITTLc FALLS
ST JCHNSVILLE
UT 1C A
TOTALS
MITS PCUGHT
L3S/CAV
1SC2.CC
55
52
72
7G
-
5?
2258
2387
2164
7584
6549
1716
10536. 74
3 5000. CO
LBS/CAY
1302 .00
2258.55
2387.
2164,
7534,
6549.
1716,
10526.
35000,
52
73
7C
25
52
74
00
CCST
t
306669.38
384641. OC
4 06 t 04. 94
363664.44
1?91 709.00
111 5 267. CO
292331.50
1794456.00
5960662.00
$/YR
49^45.09
62593. 88
66173.38
59S98.75
210220. 75
131521.75
47575.85
292C4C.94
970C75.31
TRE^TfENT
L8S/DAY
15487.00
16769.45
17171.48
5548.26
7033.30
24502.75
124S4.4B
94352.25
193S78.94
LBS/C^Y
15437. CO
16789.45
17171.48
5548.26
7 C 33 -.30
24502.75
124<;4.48
94852.25
193878.94
CCST
$
1474C22.CO
1841379.00
19C4114.0C
147676.38
88414C.75
2029190.00
1517566. CC
3540392. OC
13338479. OC
$/Y8
239691. 5C
299677. 5C
309887.38
24C33.77
143890.56
33C243.0C
246S78.13
576185.44
217C787.CC
TOTAL COST
$
1780911.00
2226020.00
2310718.00
516340.81
2175849.00
3144557.00
1809897.00
5334848.00
19299136.00
$/YR
289836.56
362276.38
376060.75
84032.5C
354111.31
511764.75
294553.94
868226.38
3140862.CO
NiTTOMAL !NCCME C'?ST=f 504C 11 S . CO
-------
The following three pages contain Tables A-46, A-47,
and A-48 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-46 gives the aggregate
demand schedule for permits from computer run 16. Tables A-47
and A-48 give the market-clearing results for computer run 16
when the supply of permits is set at 70,000 and 35,000 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-64
-------
Table A-46
AGGREGATE DEMAND SCHEDULE FCR RUN 16 CF THE MOHAWK PERMIT SYSTEM SINULATICN
PRICE
a\
in
OF °ERMIT
0.0
100.83
120.91
137.25
14.3.28
148.73
151.54
160.71
166.72
167.27
180.13
180.16 .
182.99
190.77
202.36
211.20
249.71
?54,
259.
260,
304,
321,
352,
402
426
85
99
96
60
*s Q
:> o
02
83
,22
444.05
DEI" AND,IBS
117602.00
94177.38
90223.31
86433.56
84324.25
80€25.fil
78071.81
68926.44
61657.58
61386.48
44989
44952
42355
39313
36866
34913.68
33429.92
29032.05
28469.29
20441.08
27458.90
27197.79
26566.35
252C5.70
24466.47
23772.26
PRICE
71
19
79
80
93
OF
48C
484
535
529
554
565
581
590
635
759
837
899
943
981
1075
108C
1331
1359
1382
1390
1413
1419
1424
1430
1524
1819
2278
PERMIT
.92
.09
.62
.68
.94
.34
.03
.32
.44
.54
.21
.20
.16
.93
.04
.12
.38
. 11
.82
.54
.47
.00
.54
.08
. 30
.02
.93
DEMANDtLBS/DAY
22548.63
22437.91
20637.43
20495.51
19985.1C
19638.48
19375.35
19223.25
18978.22
18227.80
17915,22
17690.39
17537.18
174C2.08
17077.54
17C59.83
16184.09
16115.94
16C57.34
16045.93
16C25.88
15902.20
15799.87
15697.54
15614.91
15545.5C
15437.00
-------
Table A- 4 7
RESPONSES CF BIDDERS FCC RUN 16 OF THE
ISSUEC= 7^033. T=RM=15 Y"S
CLEARING PRICF=$ 159.64
PERMIT SYSTEM SIMULATION
UNI7=L3S/DAV BP
01
FT PLAIN
ILICN
CANAJCHAR IE
hERK !MF =
LITTl E FALLS
ST JChNSVILLE
UTIC4
TOTALS
FT PL'ilN
TLIC'M
CANAJCHAR
CALLS
ROME
ST JCI-NSVILLE
UT 1C A
TOTALS
PERMITS ECUGI-T
LBS/CAY
4517.67
7126
2535
7567
16171
7164
20191
70000
70
7?
00
13
CO
61
CO
L9S/CAY
4517.87
4575. ^S
7126.70
2535 .72
7667. CO
16171 .13
7164.00
20191.61
70000. CO
CCST
$
721224. 3R
730EG2.C6
1137693.00
412780.25
1223945.00
2581528.00
1143£47.0G
3223350.00
11174669. CO
$/YR
94622.44
96C42. 19
149577.38
54269.99
160917.25
339404.56
15C26C. 13
423787.63
1469131.00
TREATMENT
LRS/DAY
12771.13
14472. Cl
12432.30
5127.27
6951.00
14880.87
7G47.CO
85197.38
156878.94
LBS/C4Y
12771. 13
14472.01
12432.30
5127.27
6951.00
14880.87
7C47.CO
85197.38
153878.94
CCST
$
1361751. CC
1899890.00
155CeC4.00
104824.19
1077435. CC
832152.69
920765.00
2594175. CC
10341796. CO
$/YR
179C35.25
249786. 6S
2C3890.81
13781.68
141655. OC
1C94C6.69
121056.88
341C67.31
135S68C.OC
TOTAL COST
$
2082975.OC
2630392.00
2688497.00
517604.44
2301380.00
3413680.00
2064412.00
5817525.CC
21516464.00
$/YR
273857.69
345828.88
353468.19
68051.63
302572.25
448811.25
271417.00
764854.94
2828861.00
TOTAL NATIONAL IMCG^E C'TST=J 3 5EC761 .CO/YR
-------
Table A-48
S CF BIDDERS FOR RUN 15 OF THE PCHAWK PERMT SYSTEM SIMULATION
ISSU?:C= ''SOOO. TERM=15 YRS UNIT=LBS/DAY BP
MARKET CLEARING PC!CE-$ 210.8!
POLLUTER
FT PLAIN
Rir-N
CANAJ.CHART =
LITTLE FALLS
ROMP
ST JQHMSVILLF.
UTICA
TOTALS
FT r-l MN
IL 1C'-]
CANAJCHARI6
!- F R K I ^ E c-
L!TTL~ FALLS
R G v r
ST
UTICA
TOTAL
°ERMITS ECUGHT
LBS/CAY
iao? .00
2258.56
2387.52
2164.73
7584.70
6540
1716
10536
35 3 CO
24
52
74
r r
LBS/CAY
1802.CO
2258.56
2 3 B 7 c ""'
2164.73
7584-. 7 C
6649.24
1715.52
10536.74
35000 .CC
CCST
$
379884. 13
476132.31
503319.06
456353.31
1598C.50.CC
1380662.00
361664. 31
2221278.00
7378442.00
$/YP
49=45.00
62599. 16
66173.50
59=98.73
210220.81
181521.56
47575. G5
292040.94
S7CC75.44
TR "rATHENT
LBS/CAY
15487. CO
16789.44
17171.48
5548.27
7C33.30
24502.76
12494.48
9485?. 25
193378.94
LSS/OAY
15487. CO
1678^.44
17171.48
254S.27
7033.30
245C2.76
12494.48
94352.25
193678.94
CCST
$
1824628. OC
2279359.00
2357C16.CC
182802.56
1094437.00
2511846. CO
* 1878528.00
43825C1.CC
16511117.00
$/YR
239891.63
299677.06
3C^£87.CC
24033 .84
143E9G.31
33C243.13
246S78.13
576166. 19
2170787.00
TOTAL COST
$
2204512.00
2755491.00
2860335.00
639155.88
2693387.00
3892508.00
2240392.00
6603779.00
23839552.CC
$/YR
289836.56
262276.19
376060.50
84032.56
354111. 12
511764.69
294553.94
868227.13
3140862.00
TOTAL NATIONAL INCOME C05T=f 5040 11? . CC/Vs?
-------
The following three pages contain Tables A-49, A-50,
and A-51 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-49 gives the aggregate
demand schedule for permits from computer run 17. Tables A-50
and A-51 give the market-clearing results for computer run 17
when the supply of permits is set at 11,000 and 5,500 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-68
-------
Table A-49
AGGREGATE DEMAND SCHEDULE FCR PUN 17 OF THE MCHAWK PERMIT SYSTEM SIPULATICK
PP.TCE GF PERMIT DEMAND, L BS/CAY
C.Q 36337.00
47.02 32061.50
59.73 27708.66
68.41 19216.42
71.41 16450.45
I £3.09 5910.75
§ 89.79 4152.89
268. 97 3069.80
276.57 3046.45
448.15 2567.41
47C.C6 2512.46
663.55 2027.16
677.36 2021.00
9C6.58 1912.5C
1135.79 1804.00
-------
Table A-50
o
Dc3PQNS F!5 "F F.I CHESS
t* ISSUtD= 11030. T
MARKET CLEARING PRICES 77.45
PUN 17 OF T>F MOhAwK PERMIT SYSTEM SIMULATION
5 YRS UMT=LBS/DAY BP
o n L L U T F P
FT PLAIN
I LION
TOTAL S
FT PLAIN
IL ION
TOTALS
PERMITS BOUGHT
L 35 /CAY
5067. C7
5932.94
11000. Cl
L3S/CAY
5067. C7
5932. 94
11000.01
CCST
$
292439.06
459500. 19
351939.25
S/YR
103525. C6
121215.75
224740.88
TREATMENT
LBS/DAY
12221.93
13115. C6
25336.99
LBS/C4Y
12221.93
13115.06
25336.99
CCST
$
635565.44
84C354.75
1475920.00
$/YR
167661.63
221684.88
389346. 5C
TCTAL CCST
$
1028004.50
1299854.00
2327858.00
$/YR
271186.69
342900.63
614087.38
TOTAL NATIONAL INCOME CnST=*
973668.33/YR
-------
Table A-51
P^SP.ONSEE CF BIDDERS FOR RUN 17 CF THE MCHAtoK PERflT SYSTEH SIMULATION
NUMPEP ISSUED 5500. TERM = 5 YRS UMT=LBS/DAY 8P
MA3KCT CLEARING PRIC-=$ 34.66
POLLUTED
f FT PL4IN
TOTALS
FT PLAI
ILICN
TOTALS
PERMITS ETUGt-T
L3S/CAY
3 193. f 1
2306. 34
5500. CO
L1S/CAY
3193 .67
2306. "4
55CO. CC
CCST
$
27Cr62. 50
195244.81
4656C7. 31
*/YR
71221.38
515C5.43
122£26.81
TREATMENT
LES/D^Y
14095.33
16741.66
3C636.99
LBS/CAY
14095.33
16741.66
30836.99
CCST
$
7874C8.81
1131472. CC
1918880.00
$/YR
2C7717.81
298481.38
506199.00
TOTAL COST
$
1057771.00
1326716.00
2384487.00
$/YR
279039.19
349986.75
629025.81
i^ATICNAL INCOME CCST=J ] 207 C 1 5 .00/YR
-------
The following three pages contain Tables A-52, A-53,
and A-54 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-52 gives the aggregate
demand schedule for permits from computer run 18. Tables A-53
and A-54 give the market-clearing results for computer run 18
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-72
-------
Table A-52
AGGREGATE DEMAND SCHEDULE FCR RUN 18 CF THE MOHAWK PERMIT SYSTEM SIMULATICN
-J
UJ
PRICE OF PACKAGE
0.0
243.34
253.13
265.51
316.49
321.80
3 3 0. ? *>
35?.5C
365.29
375.41
376.35
390.47
390.59
390.70
390.82
406.75
434.32
435.11
493.24
517.73
538.43
592.41
600.34
12621.33
13438.48
13390.02
13211.60
12477.30
12388.71
12334.12
12180.65
12092.63
12020.27
12003.25
11756.7?
11205.61
5185.09
7164.57
6885.73
6403.26
6365.44
4979.45
475C.7C
4631.13
4G85.87
3959.00
PRICE OF PACKAGE
617.78
618.23
626.21
645.44
682.48
698.04
708.24
772.55
777.84
798.69
845.67
E62.61
889.15
972.01
1098.36
1152.74
1224.70
1478.25
1763.76
1806.53
1849.25
1892.37
1935.45
1578.53
DEMAND,LBS/DAY
3917.07
3914.17
3842.57
3666.60
3325.12
3156.33
3045.65
2228.39
2161.12
2005.85
1656.07
1523.65
1404.62
1353.44
1190.40
1068.59
1C21.8C
961.25
953.14
899.00
815.7C
733.CO
712.00
651.00
-------
Table A-53
TE3M = 5 Y^S, W
NUM6FP ISSUrH=
MA°KET CLEA
?CSPDNSCS Cc RICCERS FCR RUN L8 OF THE MOHAhK PERMIT SYSTEM SIMULATION
U 1/5 OF °EPM!TS EXPIPTNG AT EACH 1 YR INTERVAL
4000. UN!T=LBS/DAY BOD
?5icE=$ 60C.Z5
«j
*>.
PCLLUTEP
ILICM
FT PLAIN
LITTLE FALLS
ROMF
ST Jf
UTICA
TOTALS
ILITN
FT PLAIN!
CANAJCHARIE
hEPK I^ER
LITTL- PALLS
ROME
ST jri-KSVILLE
UTICA
TOTALS
PCRMITS ECUGI-T
L3S/TAY
9'6.P'0
4 15 . C C
948 .86
441.£?
47. 5 S
140.00
78?.C6
283.00
4000.CC
L8S/TAY
936.£0
415.CC
948.86
441-fS
47.
140 ,
782.
288.
CO
C6
CC
4000.CO
CCST
$
562220.00
249105.63
569555.75
265127.56
26564.70
84C35.63
469436.31
172873.31
2401C16.00
$/YR
148239. 56
65713.81
150248.31
69C,40.44
7535.34
22168.53
123E36.88
45603.84
633336.06
INITIAL
TREATMENT
4063.20
4765.00
5051. 14
1768.31
4262.41
7650.00
3497.94
28542. CO
59619.99
LBS/C£Y
4063.20
4765.00
5C51.14
1768.31
4282.41
7650. CO
3497.94
28542. CO
59619.99
TREATMENT
CCST, $
570871.63
467592.13
717379.13
120.11
1143129.00
14444C8.0C
510056.56
2017562. CC
6871117.00
$/YR
150595.44
123350.38
189244. CC
31.68
301556. 5C
381C33.63
134552.50
532231.25
18125S5.CC
TOTAL COST
$
1133191.00
716697.75
1286934.00
265247.63
1171693.00
1528443.00
979492.87
.2190435.00
9272132.OC
$/YR
298935.00
189064.19
339492.31
69972.06
309091.81
403202.13
258389.38
577835.06
2445981.00
TGT&L NATIONAL INCOME CQST=f 42C6C12.CC/YR
-------
Table A- 5 4
* OF BIDDERS FOR RUN 18 OF THE MCHAVvK PERMIT SYSTEM SIMULATION
W- 5 YRS, WITH 1/5 CF »ER-V!TS EXPIRING AT EACH I YR INTERVAL
NUMBER ISSUCD= 2000. UNIT=L8S/DAY 300
MARKFT CLEARING PRICE=f 799. 4P
^j
ui
POLLUTER
IL IPM
FT PLAIN
CANAJQHARIE
H F 0 K I M c c
LITTL- r-ALL
ST JOhNSVILL
UTICA
TOT&LS
I LION
FT PL AIM
CANAJPHA"IE
HE "'K IMC R
LITTLp FML S
RO^F
ST JOf-MSVILL
UT IC^
TOTALS
°EPM!TS enUGHT
LBS/Cftv
396.96
404.C9
60.CO
409.94
47.CO
140 .CO
'5? .11
233.CT
2000.00
396.c£
404.99
60.CC
409.94
47. CO
1 4 0 . C C
25-' .11
238 .CC
20CO.CC
CCST
$
317262.00
323780.69
47968.75
227126. 21
37575.52
111927.06
202258. 19
230.<50.0C
1598958.00
$/YR
33719.81
3 5 4 1 3 . C 6
12654. 12
86456.56
9912. 29
29526. 27
53281.93
60139.77
421E03.81
INITIAL
TREATMENT
4603.04
4775. Cl
5940.00
1SCO.C6
4283.00
7650.00
4C26.89
28542. CO
61620.00
L8S/CAY
4603.04
4775. Cl
5940.00
1800.06
42E3.CC
7650.00
4026.99
28542. CO
61620.00
TREATMENT
COST, $
'960597.63
474822.31
1333496. OC
22753.73
1143483. CC
14444C8.00
888C94. 88
2017562.00
8285215. OC
$/YR
2534C4.88
125257.75
351775.19
6CC2.41
301649.88
381033.62
234278.69
532231.25
2185633. CC
TCTAL COST
$
1277959.00
798603.00
1381464.00
350490.00
1181C58.0C
1556335.00
1090453.OC
2247812.00
9884174.00
$/YR
337124.69
210670.81
364429.25
92458.94
311562.25
410559.86
287660.56
592971.00
2607436.CC
TOTAL NAT I CM
!NCOM=
506573? .0 j/YR
-------
The following three pages contain Tables A-55, A-56,
and A-57 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-55 gives the aggregate
demand schedule for permits from computer run 19. Tables A-56
and A-57 give the market-clearing results for computer run 19
when the supply of permits is set at 4,000 and 2,, 000 pounds
per day of BOD respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-76
-------
Table A-55
AGGREGATE DEMAND SCHECULE FCP RUN 19 OF THE MOHAWK PERMIT SYSTEM SIMULATION
PRICC OF
416
446
512
528
535
PACKAGE
0.0
389.£5
80
1 2
34
84
98
585.52
601.99
612.00
636.13
655.16
07
56
97
88
757.43
759.92
868.19
883.71
902.85
955.73
995.33
669,
671,
682,
696,
DEMAND,LB
13621
13436
13346
13093
12521
12380
12316
1214C
12079
12C35
11943
1177C
1115E
1C776
9020
6882
6362
6331
4984
4779
4676
4392
4159
S/DAY
.33
.C7
.66
.61
.93
.38
.89
.90
.05
.32
.54
.ec
.74
.39
.72
.70
.23
.19
.98
.25
.37
.16
.29
PRICE CF PA
1C18.
1023.
1C44.
1048.
1153.19
1196.46
1220.87
1350.64
1364.48
1297.21
1397.58
1548.10
1598.71
1642.27
1693.9S
1920.06
2197.86
2404.OC
2914.01
3062.45
3210.89
3367.1C
3523.31
3679.52
CKAGE
02
77
53
28
DEMANC,LBS/DAY
4012.12
3973.99
3835.48
3805.72
3376.17
3163.81
3021.59
2265.62
2185.02
1991.78
1990.47
1460.33
1358.91
1347.42
1196.03
1178.15
987.69
961.25
947.22
899.OC
813.89
733.00
712.CO
691.00
-------
Table A-56
3E-SPTNSES rp »nrE9S FOR RUN 19 OF THE MCl-AhK PERMT SYSTEM SIMULATION
= 10 YPSt '/ITH 1/5 OF °EPM!TS EX^I^ING AT EACH 2 YR INTERVAL
FP ISSUtO 4003. UNI T=L8S/CA Y 300
MAQKF-T CLEANING °R 1C E=$1019 .65
FRUITS FOUGHT
oo
POLLUTFF
II. Ir^
FT PL -UN
CANAJOHA" I
HERk I MP p
LITTLE FAL
ST JCHNSVILL
UTICA
TOTAL S
ILTON
FT PLAIN
CANA JCHARIE
1-ERKIMEP
LITTLE FALLS
ST JONSVJLL
UTICS
TOTALS
395.26
415.CO
927.63
441.41
156.1°
140.CC
735.5?
2 8 3 . f C
4000.CC
LBS/CAY
895 .26
415,
927,
441.
156,
140,
736.52
268.CC
4000.00
r f
. \. \j
63
,41
ie
CC
CCST
$
913C23.69
423236. 25
946C44.75
450168. 06
159278.50
142778. 50
751141.25
293715.75
4C79383.CG
$/YR
148591. 1?
68E30.06
153965.19
73263. 13
25C.21.98
23236.66
12?245.38
47601.13
663904.25
INITIAL
TREATMENT
41C4.74
4765. CO
5072.36
1768.59
4173.82
7650.00
3543.48
28542.00
59619.99
LBS/CAY
41C4.74
4765. CO
5072.36
1768.59
4173.52
7650.00
3543.48
28542.00
59619.99
TREATMENT
COST, $
922462.56
731693.94
1141457. OC
487.84
1782737. CC
2430004.00
839C85.44
3488877.00
11336eC3.CC
$/YR
15C127.31
119080.44
185767.81
79.39
290133.69
395474. CC
136556. CC
567801.63
1845C22.0C
TOTAL COST
$
1835486.CC
1154930.00
2087501.00
450655.88
1942015.00
2572782.00
1590226.00
3782592.CC
15416187.00
$/YR
298718.44
187960.50
339733.
73342.
316055,
418710.
258803.
OC
50
63
62
38
615602.75
2508926.00
TOTAL NATIONAL INCrl*E CCST=I A 3 83 SC8 .00/YR
-------
Table A- 5 7
RESPONSES CF BICDERS FOR RUN 19 OF THE MChAkK PERPIT SYSTEf SIMULATION
O YkS, vHTH 1/5 OP PIPITS EXPIRING AT EACH 2 YR INTERVAL
NUM3FR ISSUEC= 2000. UNIT=L8S/DAY BOD
MAPKCT CLEARING °R !CF = $1 395 . 8?
>
vo
POLLUTER
IL ICN
FT PLMN
CANAJCHARIE
HERK]V=o
LITTL^ -4LLS
ROME
ST JnH^4SVILLt::
UTIC.5
TnTiL S
ILICN
F T P l__ i I
LITTL;- cail_5
ROME
ST JOHNSVILLr
UT ICfl
TOTALS
LBS/TAV
433 .C7
398.61
63. 12
?35 .e?
47. CO
1*0.00
274.17
288. CC
? 000. CO
LBS/C AY
4G3.C7
•=98 .61
63.22
3S5 . S3
47. CO
140
274
238
2CCO
CC
17
CCST
$
562613.00
556387.06
88381.63
538549. 13
65603.44
195414.56
332695.19
431SS5. 75
INITIAL
TREATMENT
45S6.93
4781.39
5936.68
1824. 17
4283.00
765C.GO
4005.83
28542. CO
7791637.00
61619.99
TREATMENT
COST, $
1533C98.00
751518.5C
2190877.CC
68C39.88
1895635.OC
2430004,CC
141C677.CC
3488877.00
13768725.CC
CO
$/YR
91563.13
90549.88
14283.78
87646.81
10676.71
31£C2.98
62282.20
65423. 2C
454228.38
LBS/DAY
4596.93
4781.39
5926.68
1824.17
4283. CO
7650.00
4005.83
28542. CO
61619.99
$/YR
249505.94
1223C6.81
356557. OC
11C73.23
3C85C7.44
395474. OC
22^562. 38
567801.63
22408C8.CO
TCTAl COST
$
2095711.00
1307905.OC
2279258.00
606589.00
1961238.00
2625418.00
1793372.OC
3890872.00
16560363.00
$/YR
341069.06
212856.69
370940.75
98720.00
319184.13
427276,94
291864.56
633224.88
2695136.OC
TCTfL
5 174076 . 30/Y R •
-------
The following three pages contain Tables A-58, A-59,
and A-60 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-58 gives the aggregate
demand schedule for permits from computer run 20. Tables A-59
and A-60 give the market-clearing results for computer run 20
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-80
-------
Table A-58
AGGRFGAT- DFMANO SCHECULE FCR RUK 20 CF THE MOHAWK PERMIT SYSTEM SIMULATION
PRICE OF PACKAGE
0.0
473.54
520.68
565.56
627.89
642.73
675.93
712.27
730.65
804.00
817.27
831.15
845.90
867.31
904.^-4
941.07
999.07
1006.66
1060.11
1167,63
1194.15
1196.05
17.14.37
DEMAND, LBS/DAY
13621.33
12435.16
1330C.79
12964.62
12563.39
12473.50
12262.SE
12168. c2
12117.43
11897.96
11858,26
11761.73
11503.05
11109. C9
£876.96
6644. 82
6306.56
6240.59
5775. ^3
4802.59
4556.69
4539. C5
4463.50
PRICE OF PACKAGE
1234.96
1256.45
1338.49
138<9.22
1477.89
1532.98
1616.88
1667.08
1788.15
1851.59
1895.26
2098.41
2104.47
2170.21
2285.96
2541.85
2966. CC
2979.23
3646.04
3937.57
4229.11
4530.85
4832.59
5134.34
DEMAND ,LBS/CAY
4373.06
4277.65
3903.08
3627.61
3399.91
3227.75
2913.12
2724,82
2272.78
2035.88
1872.83
1420.79
1413.16
1315.13
1269.66
1155.37
965.94
960.89
942.57
899. CC
814.57
733.00
712. CO
691.00
-------
Table A-59
ES PF BICCEPS FOR RUN 20 CF THE VOHAkK FERMT SYSTEM SIMULATION
=i5 v
-------
Table A-60
RESPONSES rf BICCERS FOR RUN 20 OF THE MOHAWK PERMIT SYSTEM SIMLLATION
TERM=15 YRSt WITH 1/5 OF DE^FITS EXPIRING AT EACH 3 YR INTERVAL
NUM8CR ISSUEC= 2000. UNIT=L3S/DAY BOD
MARKFT CLCARIMO PR 1C E = $ 1 36 1 . 20
itir.N
FT DL AIN
!f CANAJPHARIE
CO
00
LITTLE FAt LS
ROME
ST JO^NSVILI c
UT 1C A
TOTAL S
FT PLAIN
CANAJCH&PIF
H£i3K TMPP
t_ T T T I. P FALLS
PO^E
ST JOhN'SVILL-
UTICA
TOTALS
S PCU-
L3S/CAY
389.44
390.71
111.38
361.29
47.00
140.00
272. 11
288.00
2300.CO
339.44
390.71
111.23
361.^9
140.00
272. 17
238.On
2000.00
iHT
CCST
$
724834.63
727198. 38
2072C5. 56
672433.75
87476. 50
260568.44
506563. 56
536C?6.56
3722404.00
INITIAL
TREATMENT
4610.55
4789.29
5SS8.62
1848.71
42£3.CO
7650.00
40C7.83
28542.00
61619.99
TREATMENT
CCST, t
19C3198.0C
914184.31
2661444.CC
124923.31
2394742.00
3107195.CC
1747279.00
4572325.GO
17425280.00
$ /Y3
95297.06
95607.38
27255. 35
88407. 75
11500.91
34258.05
666CC. C6
70473.69
39400. 44
LBS/DAY
4610.55
4789.29
5 8 S 8 . 6 2
1848.71
4283.00
7650.00
4007.83
28542.00
61619.99
$/YR
250221.56
12C191.69
349911.44
16424.20
314847. CC
406516.25
229722.25
601143.19
2290976.00
TOTAL COST
$
2623032.00
1641382.00
2868749.00
797357.06
2482218.00
3367763.00
2253842.00
5108351.00
21147680.OG
$/YR
345518.63
215799.56
377166.75
. 104831.94
326347. 88
442774.25
296322.31
671616.88
2780376.00
TUT
IVATIPi\iL INCHMF C
5 276 9 2 1 . C 0 /Y»
-------
The following four pages contain Tables A-61, A-62,
and A-63 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-61 gives the aggregate
demand schedule for permits from computer run 21. Tables A-62
and A-63 give the market-clearing results for computer run 21
when the supply of permits is set at 70,000 and 35,000 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-84
-------
Table A-61
AGC-PEGATF DEM AM C SCHEDULE FOR RUN 21 OF THE MOHAWK PERMIT SYSTEM SIMULATION
oo
Ul
OF QACKA3E
0.0
33.54
36.10
38.65
43.26'
47.86
49.66
50.73
51 .39
51.41
5?,56
52.91
54. P 5
55.55
57.97
,4C
,53
,62
.47
58.
58.
58,
61
62.^3
62.85
62.95
63.11
63.56
64.41
64.41
64.59
65.25
65.39
66.08
67.75
67.86
69.23
70.00
DEMANCtL9S/DAY
117802.00
115784.50
89E36.81
84232.81
31109.63
78821.38
7gC79.19
77633.75
76716.00
1 76687.13
74707.81
74319.00
72855.63
7242C.19
71156.56
68542.19
64546.51
62262.86
6C550.44
59115.44
57464.48
55296.14
54913.78
54452.96
53C4C.C6
5C869.59
5C845.C7
50383.45
47053.61
46577.65
44234.11
42594.11
42383.16
39500.C2
37868.28
PRICE
CF PACKAGE
70.11
72.94
73.21
75.59
76.66
78.43
79.16
79.8C
81
82
86
86
88.11
90.10
90.46
96.12
97.62
14
00
05
74
32
75
,46
99
103
103
103.87
109.29
112
116
118
119
44
27
92
56
12C.99
123.46
133.39
133.79
134.18
134.84
137.63
138.15
138.48
DEMAND,LB
37679
35559
35341
3373C
32849
31715
31242
30816
30146
29048
26726
26564
26142
25487
25406
24306
24013
S/DAY
.05
• **3
[95
.91
.17
.8C
.43
.79
.17
.73
.C7
.40
.57
.58
.32
.£2
23239.9C
21570.72
21375.27
21295.S2
20254.25
19855.77
19439.93
19228.44
19190.64
19111 .60
19011. 18
18567.60
18126.25
17632.21
17798
17663,
17646
,39
,66
,55
176C2.73
-------
Table A-61 (continued)
PRICE OP PACKAGE 9FMANC, LBS/DAY PRICE OF PACKAGE DEMAND, LB S/CAY
142.11 17160.60 183.32 13837.03
146.07 16677.36 185.61 13665.61
143.66 16631.13 186.79 13581.88
151.11 16514.54 189.99 13362.20
158.86 16139.11 194.37 13061.73
160.P2 16096.13 219.98 12959.57
164.52 15902.39 225.25 12923.59
> 169.06 15408.5C 225.74 12771.95
QO 17C.79 15220.32 226.22 12725.5C
<* 177.05 14517.02 237.72 12645.67
179.26 14269.09 249.23 12410.16
181.24 14124.55 253.16 12329.68
181.44 14C96.05 260.74 12174.64
286.35 12001.OC
-------
Table A-62
3 = S°ONSES C- eiCr-^PS FOR RUN 21 OP THE MOAWK PERMIT SYSTEM SIMULATION
TERM= 5 YDS, WITH 1/5 C1 F °FRM!TS EXPIRING AT EACH 1 YR INTERVAL
NUMRF5 ISSU~D= 700CO. UNrT=LBS/OSY BP
HAPKET CLEARING P?ICE=$ 58.07
if
00
-vl
POLLUTE?
FT PLAIN
I LION
CANAJC-HAP IE
HERKIMFR
LITTLE PALLS
ROMC
ST JCHNSVILLE
UTICA
TOTM.S
L3S/CA'
7373. 5C
7676. 2C
9603.29
3833.62
7667.CC
14835. 11
7145.65
11860. 69
70000.13
FT PLAIN
ILION
CANAJCHARIP
LITTLE F4LLS
ROME
ST JCHNSVILLF
UTICA
TOTALS
L3S/CAY
7373.50
7676.7-C
96C3.29
3833.62
7667.CC
7145.65
11360.6<;
70000.3?
CCST
$
428149.44
445731.88
557914.19
222602.69
445191.63
851414.69
414S19.C6
683732.06
INITIAL
TREATMENT
9915.50
11311.70
9950.71
3879.38
6951.00
16216.89
7C65.35
93528.31
TREATMENT
CGST, $
367548.81
486047.69
395C46.13
1398.22
379S4C.5C
470746.75
314610.38
1552839. QC
4C64623.CO
158878.81
3968675.00
$m
112^45.44
117583.69
147177.31
5872Z.41
117441. 19
227240.50
109455. 31
181679. GO
1072244.00
LBS/CAY
9915.50
11371.70
9950.71
3879.38
6951.00
16216.89
7CC5.35
93528.31
156878.81
$/YR
S6S59.C6
128218.94
104212.81
50C.75
100228.00
124182.56
82993.94
409637.69
1046^33. 31
TOTAL COST
$
795698,25
931779.56
952960.31
224500.88
825132.13
1332161.00
729529.44
2241541.CC
8033300,00
$/YR
209904.50
245802.63
251390.13
59223.16
217669.19
351423.06
192449,25
591316.69
2119177.OC
TOTAL NATIONAL TNCOME COST=J 2 A7 1 2? 3 . G G/YR
-------
Table A-63
RESPONSES CF BIDDERS FOR RUN 21 OF THE MCHAWK PERMT SYSTEM SIMULATION
TEPM= 5 YDS, WITH 1/5 HF DAVITS EXPIRING AT EACH 1 YR INTERVAL
NUMBFR ISSU£0= 5500G. UNIT=LBS/DAY BP
VARKFT CLEARING Pc>IC~=* 73.7?
jjs FT ° L ^ IN
i I LI ON
oo C ANAJnH.A&, T
HEPKIMEP
ST JChN^VILLE
UTICA
TOTALS
FT PLAIN
IL ION
CANA.JQ^AP IE
HERK I MER
LITTLE FALLS
ST JCi-NSVILL
UTTCA
TOTAL S
PERMITS FPUGHT
LBS/TAY
252^.72
.21
.13
3815.99
7C81.77
6762.P2
3 fl 41 . ? 7
2688.CC
35000 .CO
L3S/CAY
25^" ,
3743
4543
3815 .
6762,
3341
72
21
,77
,62
,37
2683.CC
3 5 C C 0 . C C
CCST
$
186C43.38
275<541.50
334909.56
281307. 06
522C52.81
498540. 88
283177.69
198153. 69
2530123.00
$/YR
49C78.09
72793. 13
• 88343.88
74208.56
137117. C6
131514.69
7410?, 00
52272.79
680634.38
INITIAL
TREATMENT
14765.28
153C4.79
15015.88
3897. Cl
7536.23
242E9.18
10369.63
102701.00
193878.94
LSS/DAY
14765.28
153C4.79
15C15.88
3897.01
7526.23
24269.18
10369.63
1C27C1.CO
193878.94
TREATMENT
COST, $
681108.81
742595.56
729975.94
3059. 5C
421367.44
990847.19
542391.38
2088168.00
6199511. CO
$/YR
179675.94
195696. C6
192567.06
EC7.C9
111156.38
261384.69
143C82.38
55C657.06
1635426. CC
TCTAL CCST
$
867152.19
1018537.06
1064885.OC
284366.50
9-43420.25
1489388.00
825569.06
2286321.00
8779638.00
$/YR
228754.
268689.
280915.
75015.
248873.
392899.
217784.
603129,
CC
19
94
63
44
38
38
,81
2316060.CC
TCTAL
TNCCMF CCST
3080?2.QO/YR
-------
The following four pages contain Tables A-64, A-65,
and A-66 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-64 gives the aggregate
demand schedule for permits from computer run 22. Tables A-65
and A-66 give the market-clearing results for computer run 22
when the supply of permits is set at 70,000 and 35,000 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-89
-------
AGGRCGATF DEMANC SCHFCLLC
Table A- 6 4
RUM 22 C F THF MCHAWK PERMIT SYSTEN1 SIMULATION
PRTCF OF PACKAGE
0.0
56.74
60.27
6 3. 8 C
71.30
78.80
84.10
85.36
V£>
O
85,
81
59
98
25
67
88
90
94
96
98.37
100.99
102.36
103
104
106
106
106
109
109
113.05
113.66
11^.84
114.79
115.75
119.49
119.51
12C.45
124.14
128.25
12<9.7C
,61
,69
,05
,24
,62
,22
,75
DEMANDtLB
117S02
116135
89845
83914
81119
78648
7 7 6 2 C
7732?
77041
75765
75178
73705
71714
70238
69515
66484
63948
61513
59413
56<784
56201
55540
49559
48495
44501
44051
43914
42844
38920
35910
35897
35403
32856
32711
32243
S/DAY
.00
.31
.00
,C6
.94
.75
.94
.44
.56
.25
.06
.88
.94
.06
.06
.69
.59
.31
.1C
.51
. £2
.98
.23
.99
.81
.9£
.79
.24
.14
.22
.24
.52
, 89
.27
PRICE
OF PACKAGE
131
138
140
141
142
143
151
53
1
156
162
162
163
163
164
164
165
165
166
168
169
170
178
183
192
197
197
197
200
219
222
226
231
231
235
2A8
.16
38
.75
.13
.51
.58
.01
.86
.58
. 77
.95
.64
.83
.59
.89
.20
.54
.80
.05
.30
.64
.32
.47
.31
.40
.44
.86
.34
.73
.36
.84
.11
.79
. 3<5
.65
DEMAND,LBS/CAY
31909.83
30318.57
29497.66
29385 .09
23986.07
2865C.91
26513.13
26173.17
25847.7C
25C92.73
25003.S2
24497.60
24314.47
23599.97
23162.14
22819.61
22473.36
21590.41
21238.79
2C891.43
20520.50
19761.27
19536.27
19263.07
19095.64
19094.24
19080.14
19019.64
18471.06
18400.95
18329.21
17890.19
17844.30
176C9.C9
17382.16
-------
Table A-64 (continued)
PRICE OF PACKAGE DEMAND,LBS/DAY PRICE CF PACKAGE DEMAND,LBS/CAY
251.22 1727?.28 220.14 14114.21
25-*.27 17171.28 342.44 13562.98
761.91 16761.34 350.CS 13320.60
266.13 16560.59 351.60 13298.48
275.17 16103.16 373.05 12983.98
280.11 16006.68 380.73 12972.7C
281.63 15961.16 381.57 12823.05
301.54 15298.93 382.4C 12777.77
*0~.43 15P31.17 389.89 12766.75
308.69 15048.91 422.1C 12672.28
312.04 14896.C9 461.80 12399.29
312.^4 14872.97 467.23 12361.96
376,76 14260.04 501.5C 12126.3C
544.57 12001.00
-------
Table A-65
3 E SENSES <~p A!CCE»S pr^ RUN 22 OF THE !"CI-AkK PERMIT SYSTEM S I I*L L AT ICN
TED>'=10 VPS, W!TM 1/5 Oc P^cf/i-r-5 CXCI)5IK'G AT EACH 2 YR INTERVAL
F-i ISSUED 70030. UN! T=LB S/DA Y BP
ET r,L = 4*!*''; P?[Cr=« 97.? 3
to
FT
IE
HERK IMrq
LITTLE PALLS
ST JrH\lSVILLE
U T I C A
TOTALS
FT °l.
! L ! ON
IE
LITTLE CALLS
ST
UTICA
TOTAL S
M!TS PCUGHT
L3S/CAY
6843.30
8^28
3346
7667
15208
7161
12590
62
CO
14
63
34
700CO. CC
L2S/OAV
6843 .€0
7753. CP
892° .52
3846 .62
7667. CC
15203. 14
7161.63
12 590. "4
70000. CC
CCST
$
£65425. 33
753^23. 13
669124. S8
374C03.38
745166. 31
1478695.00
696328.81
1224165.00
6S06135.00
f /YR
108295.50
122693.13
141234.00
6CE68.46
121321.81
240S52.00
113324. 88
199228.25
1107€72.CO
INITIAL
TREATMENT
10445.20
11294. C2
1063C.48
3866.38
6951. CO
15843.86
7049.37
92798.63
158878.94
LBS/CAY
10445.20
11294.02
1C63C.48
3666.38
6951.00
15843.66
7049.37
92798.63
156S79.94
TREATMENT
COST, $
659990.06
3C8738.C6
723C86.36
2546.69
618267.94
748489.25
526377.94
2529489. OC
6616982. OC
I/YR
107410.88
131619.06
117679. 5C
414.46
1CC62C.75
121E13.81
85666.00
411664.81
1076888.00
TCTAL COST
$
1325415.00
1562661.00
1591210.00
376555.OC
1363734.00
2227184.OC
1222706.00
3753654.OC
12423119.00
$/YR
215706.38
254317.19
258963.50
61282.92
221942.56
362465.81
198990.88
610893.06
2184560.00
TOTAL NATICMAL INCOME COST=* 2522975,00/YR
-------
Table A- 6 6
TF BIDDERS FOR RUN 22 OF TFE MC!-AhK PERMIT SYSTEM SIMULATION
TER^=10 YRS» WITH 1/5 OF PERMITS EXPIRING AT EACH 2 YP INTERVAL
NUMBC|5 !SSt'~pi= 35000. UNIT = LBS/DAY 3P
MARKET CLFftRINH 3«TCE=$ 121.42
FT Dt.4TN
I L T C N
CANA JQHAR 1 ^
HERK I^FF,
LITTLE FALLS
ST JCHNSVILL'
UTICA
TOTALS
FT PLAIN
IL !CN
CANA I CHAR Ic
jjppXiM£o
LITTLE FALLS
R 0 N' E
ST JCI-KSVILL'
UTT r A
TOTALS
•;MITS FCUSHT
LES/C *Y
2526.64
3 556. 1C
4456. TS
3333.59
7?2° .15
7G67. 80
3547. E7
2 6 3 3 . C C
35000. CC
L 8 S / C ^ Y
2526.64
3556 . 7C
4456.25
3832.59
73""1. i 6
7067 .30
3 54 7. F 7
2 6 3 8 . C C
35000. CO
CCST
J
306774.63
431839.50
541C59.25
465457.94
339148.00
858142.44
430767. 31
326365.75
4249552.00
$ /YR
49926.41
7G28C. 25
38C55.31
75751.50
1447C5. 44
139159.44
70105.75
53114.80
691598.56
INITIAL
TREATMENT
14762.35
15491.30
15102.75
3879.41
7294.84
23984.20
1C663. I?
1027CL.OO
193878.94
LBS/CAY
14762. 35
15491.30
15102.75
3879.41
7294.84
23984.20
10663.13
1027C1 .00
193378.94
TREATMENT
COST, $
1133936. CC
1266824.00
1226C67.0C
3971 .18
658661.81
1635861.00
942673.25
3547C25.CC
10415238.00
J/YR
184543.81
206170.81
199537.75
646. 29
107197.94
266230.19
153449.06
577264.94
1695C4C.OC
TOTAL COST
$
1440710.00
1698663.00
1767126.00
469429.06
1547829.00
2494003.00
1373640.00
3873390.OC
14664790.00
$/YR
234470.19
276451.06
287593.G6
76397.75
251903.38
405889.63
223554.81
630379.69
2386638.OC
;4367.CC/YR
-------
The following four pages contain Tables A-67, A-68,
and A-69 of the Meta Systems Inc report, "Marketable
Effluent Permit Systems." Table A-67 gives the aggregate
demand schedule for permits from computer run 23. Tables A-68
and A-69 give the market-clearing results for computer run 23
when the supply of permits is set at 70,000 and 35,000 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-94
-------
Table A-67
AGGRFGAT- DFMANO SCMPCL'Lr ^CP 2UIV 23 CF THE MOHAWK PERMIT SYSTEM SIMULATION
VD
Ul
PRICE CF
0.0
73.14
76.72
80.30
39.48
98.65
107.05
109.15
109.47
111.49
112.45
119.16
12C,94
126.25
127.32
132.61
133.29
13 * . -4 8
136.12
133.69
138.73
138.97
141.90
142.34
145.00
145.34
146.64
148.56
149.64
15?.67
156.73
160.?9
160.55
171 .39
171.55
;EMAND,IBS/DAY
117802.00
116477,25
89854.25
33560.38
31121.25
78510.44
7744g.CC
7^125.06
77036.31
76210.63
75765.63
73112.£3
72293.8P
69562.19
63795.31
65771.63
65164.77
63047.38
62302.34
57917.34
57777.33
56901,64
46398.81
45579.45
42020.77
41567.72
40591.26
38900.66
38026.92
36226.C5
3^465-34
3302?.00
32946.15
3C874.0C
3C843.67
PRICE
OF P
172
173
179
192
193
193
194
197
201
204
207
207
209
210
214
215
215
221
221
226
235
236
244
245
246
256
269
271
291
292
301
311
319
320
331
ACKAGE
.06
.93
.66
.00
.33
.58
.22
.95
.68
.34
.17
.97
.40
.00
.9C
.11
.92
.84
.84
.62
.83
.89
.87
.81
.73
.58
.98
.63
.31
.95
.59
.88
.56
.49
.92
DEMAND,LBS/CAY
30763.47
30524.45
3C084.59
27051.90
26978.00
26959.55
26910.27
26276.C3
25646.99
25444.81
25052.23
24759.05
23840.76
23454.27
21425.71
21380.99
21206,98
20330.64
20330.69
19949.16
19322.59
19249.65
19051.86
19036.53
19C21.C6
18807.36
18478.36
18440.29
18182.36
18112.37
17750.73
17447.14
17342.64
17328.35
17159.46
-------
Table A~67 (continued)
PRICE
OF PACKAGE
334.16
356.45
35^.28
36?. 58
370.71
376.48
377.34
378.14
393.37
396.11
397.07
4-00.27
406.54
433.40
DEMAND , L E
17127
16795
16633
16376
16093
15864
15806
15802
1557C
15343
15244
15181
15073
14536
S/CAY
. ?9
.68
.82
.28
.25
.31
.95
.39
.45
.69
.38
.66
.09
.88
PRICE OF PACKAGE
44?. 78
453.79
484.65
485.73
486.80
489.46
490.31
501. C4
524.40
536.13
565.16
643.53
648.54
721.89
772.68
DEMAND, LB
14349
14112
13449
13277
13210
13153
13134
12979
12837
12744
12692
12392
12373
12093
12001
S/C AY
.48
.88
.20
.62
.18
.09
. 7C
.31
.41
.98
.12
.59
.42
.05
.00
-------
Table A- 6 8
TCSPCNSES nF SICCERS FOR RUN 23 OF THE PCHAWK PERMIT SYSTEM SIMULATION
TFRM=15 Y^S, WITH 1/5 OF PEWITS EXPIPING AT EACH 3 YR INTERVAL
!S5UCC= 70000. UNIT=L3S/DAY 8P
CLEARING PRIC~=i 125.43
POL'_UTC?
FT »LAIN
ILION
C A N A J 0 H A -"! I E
HERKI^EP
LITTLE FALLS
ROME
ST JTHNSVILL^
UT ICA
TOTALS
FT PL ATN
ILION
CAN A JCHAQ IE
HE"KItfER
LITTLE FALLS
ROME
ST JOHNSVILLF
UTICA
TOTALS
PERMITS FTUGV-T
L3S/PAY
6924.44
7792.46
8901 .24
3861 .C6
7667. CO
15614.79
6^36.96
12302.09
70000.00
L8S/ CAY
6924.44
7792.46
8901 .24
3 3 fc 1 . C 6
7667. CO
15614.79
6936.96
12302. C9
70000 .CO
CCST
$
868526. 19
977401.13
11164 75. CO
434?39.69
961665.19
1958549.00
87CC97.50
1543C40.00
8730C42.00
$/YR
114188. 81
128503. C6
146187.75
63671.64
126434.25
257498.81
114295.44
202870.06
1154249. CO
INITIAL
TREATMENT
10364.56
11255.54
10657.76
3851.94
6951.00
15437. 21
7274.04
93C€6. 88
158878.88
L8S/CAY
1C364.56
11255.54
10657.76
3651.94
6951.00
15437.21
7274.04
93086.88
156878.88
TREATMENT
COST, t
827C76.31
1028225.44
922653.13
2379.23
767C29.94
896931.31
699167.38
3265C09.00
84Cfi569.CO
$/YR
108739.25
135198.31
121305.13
312.81
10C844.69
117923.38
91522.50
429264.75
1105510.00
TOTAL COST
$
1695602.00
2005726.CO
2039128.00
486668.88
1728695.00
2855480.00
1569264.00
4808049.00
17188608.00
$/YR
222928.06
263701.38
268092.88
63984.45
227278.94
375422.19
206317.94
632134.81
2259859.00
TOTAL NATIONAL INCOGS
:586C5C.OO/YP
-------
Table A- 6 9
RESPONSES rp 3IDDERS FOR RUN 23 OF THE MOAWK PERMIT SYSTEM SIMULATION
TERM=rl5 YRSt WITH 1/5 OF PERMITS EXPIRING AT EACH 2 YR INTERVAL
NUMBER ISSLEn= 3500C. UNI T-LBS/D AY B»
MARKET CLEARING P"!CE=$ 155.50
vo
«3
PCLLUTER
FT ° L A I M
ILICN
CANAJDHARTC
LITTLE FALLS
ST JCI-NSVILL
U T ! C A
TOTALS
FT PLAIN
ILICN
CANAJQHARIE
HERK TMPR
LITTLE FALLS
R QVP
ST JCHMSVILl. F
UTICA
TOTALS
R M I T S SCLENT
LSS/fAY
2491 . £ 2
3005.79
40^9. 5q
3851.97
7409.48
7239. 13
4274.23
2688. CC
35000. CC
L3S/CAY
2491 .6?
3005.79
4C39.5?
3951.97
7409. 46
7239.13
4274.23
2688. CC
35000. CO
CCST
$
387463.56
467385. 75
628135.25
598963.00
1152140.00
1125651.00
664622. 19
417971.38
- 5442336. CO
$/YR
50942. 15
61449.21
82583.63
78748. 19
151476.75
147994.13
37380.69
54952.49
7155?7.25
INITIAL
TREATMENT
14797.16
16042.21
15519.42
3861.03
72C8. 52
23812.87'
9936. 77
1027C1.00
193878.94
LES/DAY
14797.16
16042.21
15519.42
3861. C3
72C8.52
23S12.87
9936.77
1027C1.00
193878.94
TREATMENT
COST, $
1445140.00
1700157.00
162C511.CC
3656.59
805721.63
2071920. CO
1085285. CC
4563386. OC
13315776. OC
$/YR
189998.75
223526.94
213C55.5C
48C.75
105931.63
272404. 19
142687.06
602597.44
175C6S2.0C
TOTAL COST
$
1832608.00
2167542.00
2248646.00
602619.56
1957861.00
3197571.OC
1749907.00
5001357.CO
18758096.00
$/YR
240940.
284976.
295639.
79228.
257408,
42C398.
230067.
657549.
88
13
13
88
38
31
75
88
2466209.CO
TCTiL
E CCST = J 40C4 c 1 3 . OC /YR
-------
The following three pages contain Tables A-70, A-71,
and A-72 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." Table A-70 gives the aggregate demand
schedule for permits from computer run 24. Tables A-71 and
A-72 give the market-clearing results for computer run 24
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-98-1
-------
Table A-70
00
I
AdGKtUAlt Ut. MANU SCHhDULt FOK
H^ICL Oh HtrtHlT UhMAfMU»l_rtb
0.0 13^24.
2 b * . U fo 1 2 b 4 J .
2 9 H . 3 4 1 1 6 H J .
Jbl . *34 1 I4f? / .
j 7 d . b ti lijfd.
391.20 1 1 2 <-> 0 •
D 3 f. . 0 / 1 U 0 6 9 .
Sbb.d4 9991.
o o b . b b 9 d ^ 3 »
r>37.26 9T7J.
7 64. ^2 9374.
770. Ob 93bb.
111^.2? 7166.
li»8.2/ bH^b.
I23o.«2 b43b.
U2D.bh b729.
HUN ^4 Uh Trlt MOHAWK PhHMiT bYbfh M b i hUi. A 1 1 Oiv
ooAY
Ul
U 2
64
Ob
11
04
44
39
94
21
b4
13
HH1CE Of '
1 S M /
1 ""4* tD *"*
153«)
lb()b
194^
2164
23d U
249^
3014
33fO
3472
4911
6009
71 On
MtHMll iJtMANU* i_bb/l,)A Y
. 2B 31/3.40
!b2
.3J
.4«
.fib
. 7b
]ib
.99
«_HI»
. Ob
,09
,H4
.37
. 90
4t>9u
4140
213ti
1913
1 iJbb
1U34
«4b
^33
f 12
.<+b
.29
• 1 (
.01
.11
.f-3
.4b
* ' *T
.3b
.00
.00
8^04.4J 091.00
-------
Table A-71
ti Oi- '-. I'.mtrtb MJK HUN ^4 OF I
4000.
UNI T =
M iIMUi_a f 1U)'-J
ciUiJ
t>
1
VD
00
1
w
«AH*tT CLt^lNN
HOLLuTtw
1 L I U • -
f- T t->LA i «
C A N A j u n o x 1 r.
rtt*< 1 '11- -<
LITTLc! 1-uUL^
K I.) ("1 ^
b T juntas v 1 LLe
UTIC. A
TOTALS
1L1UN
FT ••'L A ) 'v
C n N A > j U f- u K i f.
nF K< I Mt •<
LTTTLt F^LL--
KvJMh
ST juni bVlLl.t
UTICA
TOT;»Lb
^Kirc,tlb4b.7/
Hr nf I TS lUUbHT
L r b / U fi Y
b V 4 . d 4
^ 74.o9
o33.4b
? V 1 . d 7
4^6. ^e1
bv7. 17
4V 1 . ^h
bfcU.^0
4000.00
L H b / u h f
b94. o**
^ ?4.d9
b33.4b
H^l .£<
4hb . ^i1
h 4 T . 1 7
4S»1 ,9fr
b b 0 . d (i
4000.00
CUbT T Hh f- 1 f-tNT CUb 1
j> ! Mb/UAY *
9i94ol.£b 44uD.lft 113d/0c:.
4d4^Uri.JO " 4Vub.li b«uby3.
y/91/3.t>y b3rt>.34 13103^3.
4Dii^j7.bs» lslH.7.1 a {(**£•
/^OO/4.^«* 3«'i3.^ci 1^4^*44.
10 / ?t>b£.0u 70v<-.Hi 1^ ta^eto.
7b.U457.00 37HH.04 ^&OUi4.
Hb04^.Bi /Yr( Lbb/OwY »/YH
f4ir|b3d.3e 440t>.16 3003«a.
ll^OVO.44 4 V Ob. 11 d.Sdei.^i^»
i'bdjub.iy SShb.-jf 34aboo.
lib/ 7 ^. 31 1 9 1 to . 7 J iiJ14e>.
190113.44 3b<->3.7H 461533.
£rB4<;bti.3b 7!)9«r.d3 Siiiob4.
dOOblf/.S*4* 3 / H H . i; 4 elb^Jbi.
/^43bb.dr( ^brf^.MU 119o4lb.
in310W^.Ol» bVblS*.9« J33t)^ttl.
00
44
00
0 H
OU
00
44
00
00
63
94
&3
^ 1
^1
V4
44
00
00
TUTAL CObl
i
^Obbib3.00
130bDO^.OO
^ 1 3 4 7 0 1 . 0 0 / Y h
-------
Table A-72
HtbPONbtS OF BiOUtKb I-UK HUN
£000. TtHM= b
OF Int.
HtKMiT bYbTtM o
UNI T = t_bb/UA r HUU
1
00
1
M A H rv 1 1 C L h A K i iM b H *i j
11.1 UN
F 1 *-> L A i i\i
(j 4 1\; A J U H A K 1 r
n h. K N 1 M h *
LI TILL t-ALL->
K ( 1 r«* r.
o r 10
TOl-Al.i.
iLJLOiM
1- I HL« i ••)
C AiMrt JUr -it 1 y
nh KK J Mr •<•
LlTfLr. C*LL>
H0l» t
bT jon...-,« iLLt
U 1 1 C A
Tuf -AL ^
TU 1 AL N4 1 IO-M«L 1 'Mt<
Lfcb/U^ Y
337
4f
1<+0
?f Me»
£000
3h^
<£bl
337
£!44
47
140
£SiV
?000
j^t. CObT
.b4
, 00
.00
.00
.00
/O^ Y
. u4
. Ot*
.b4
.01
.00
.00
• bK
. 00
= » b ^ 4
CObT 1 ••'t P 1 <"'hiM I Oybf
* LWb/l"*Y %
bi)i<;jb.y4 491H.Jrt 90oOttl.94
77b94o.fb bbb<"_.3b itt rdy£b_. 0 0
Db07bi.0b 19bb.S-* IHiiii.-io
3dl7JD.bl 7b!-0.00 -^ybii^J.OO
btitt^0<;.bl J9^0.3^ iJJ7bb«i.OO
bbiMbb.bO ^Hb'+i'.Oo 4^4bb«b.OO
-+b-*b££3.00 blb!9.^9 1 ocJOdbbb . 00
*/YK Lttb/U«Y i/Yrc
£31bl0.db 4bi^.^5 4dd- ^b.94
Ibobua.bb 491b.3H «:ji*w
-------
The following three pages contain Tables A-73, A-74,
and A-75 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." Table A-73 gives the aggregate demand
schedule for permits from computer run 25. Tables A-74 and
A-75 give the market-clearing results for computer run 25
when the supply of permits is set at 4,000 and 2,000 pounds
per day of BOD respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-98-5
-------
Table A-73
00
I
HKIO Ul-
bChtUULt t-Ut HUN rb Oh Tht MUHAWK
PHiCE OP HfeK
120 J. Oto
bfSTt>
Ur
»LOi/UA Y
3 0 7 .
3 4 4 . o *
b 1 4 . 3 b
•D y 1 . d -,,'
"?l^.'fj~
r> b y • U 4
1 00?- . dJD
U L_f_. 1 3
'i^ii 1 .^3"
iiThH.Uii _ A3^_y»J?J •*1^.»<*.9
IlS7d.lb 1373^36 _3c>d4.4y
iif43.b7 lbU3.3U <£>'3y.d.yv bb^b.^1 Md.OU
3b oyl.uu
-------
ur
Table A-74
I- UK KUN £D Ui- I nt
r.j U H « i-_ rt (
Ki-Kf"IT
ui-i ] T = Lbb/ua v
>
1
VD
t»
1
!«ttH
iLi
F T
CAN
Ht K
LIT
K 1 1 i*>
Sf
Ul 1
r->r
it. i
FT
C H IN
Ht>
L11
^'U"1
bf
U i J
TO'!
M: r t.Lt^i.v-, I-KIO =1 1 j,; f. Is
^ r •< '•• i r b n ( . U to --i T
ULLU I t." Lbb/Uf Y
HLAli-; ^CH.^7
AJU-Uri- Ofb.fl>
rsll^S-,' t^l.dl
(Ltr t-«LU-. S.^.ul
Jtirt-^-j «/ iLL r_ bif.J?
L h ^ i, b . 7 h
<» L i <* U U U . 0 0
1. . * b / u 1= Y
Ulv >^U-^.f^
^LM t v tla + ii'l
in JUf-D-i K 1 r ohb.ff
IKlMt-- ^^ / « d 1
TLfc c^Lf- bjiy.oi
•<»-. ^^b.b^
.jUrl' ,S -i It Lf olf.J^
LCM f i'b. /b
I'^Lb fOCO.UO
H U u o c .5
JbVJUJ
^ b 4 o / e
.i y <* f f o
/ i D.jf a
y c f f b fc
b Jbf ^b
b ,•! 0 c b ti i
*/ f K
b f
i « d ? 'J H
c1 f J a ^ U
1 c30 Ob^
1 f d U b f
i f U 0 J •-• 9
. ->u
. e' b
.f f
• ub
» ' -3
.bu
. uu
. 3tt
. ow
.3H
.bO
. irt
.9f
. ub
,t>3
. UU
1 >-:t « I'-'fcNl U'Jbl
Lbb/hAY *'
4^9b.bf Vf'J^jJ.
f^Ui.73 /fU9 «; f S/YH
fJSo.bt lifbibf.
f yi'l . / J IVbf bD.
b3jf.6i' c!Hi3ii3.
iyif.^v ly /3uu.
7 '• > J J • f- r* fJOfbJ.
J^bb.b'S / YK
f 39f J 7.19
^y^d / /. Ji
biff 39. 19
i^J7 /b. i9
bb/009.00
ft^U334 ,b3
3HHc!^l . i j
i(?ibbJ J. 00
f ^J
-------
OF
N U M M t. K i sS.ul--l.=
Table A-75
FOK HUN «^3 OF ]Ht hUhdwK. HhHMlT bYbTtM blMULAFiUN
tKM = b YHb UNI T=i_0b/U4r bUO
MAW* El (,Lt Ar*lNo f"
K'JLLUl L«
lL I ON
r 1' f-LA 1 ,<
H t H f\ 1 M f •»'
^ LITTLt r^LL.>
VO riO'lr
oo
I bT jure- -> v 1LI.!-
00 U 1 I C 1
TOTaLb
ILION
F f '-'LMi -\
CA.MAoU^f. K IF
HE*-\ IMC. •<
L i F T L t h '• L L -
KU*r
b I UUH «SV iLLt
U 1 1 C A
r u i 4 1 b
« 1 Cr. = >3.31
^ in 4.7
r ^* O • i £T
"7 . 00
1 «* o . 00
^td. UO
f 0 0 0 • 0 0
L r b / U a Y
3 7 3 . b 3
^03.31
3 Jr. 4 7
bY
4b^4 . 4b
4vlb.bV
l*0:Ui:H"
»«;.*< 3 i.0.0.
7 b 3 u . 0 0
3V77 .()««•
2«b4
1 J32J ^S.OO
/bb Jb4 . 44
ib0
3btiH7b.t>l
Obol ob . 00
3 0 J u O ( . H M
HlbUbJ.OO
job^32y . Oo
TOTAL COS)
t.
ti ii4c:b.oo
13i
-------
The following three pages contain Tables A-76, A-77,
and A-78 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." Table A-76 gives the aggregate demand
schedule for permits from computer run 26. Tables A-77 and
A-78 give the market-clearing results for computer run 26
when the supply of permits is set at 70,000 and 35,000 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-98-9
-------
Table A-76
A ft. DtiviftNt> SCntDULt Fun HUN
UF Trih WUHAWK Pt-KHll bYbTfc>. SIMULA I ION
oo
I
PK 1C!- Of HtHMl 1
0.0
7 7 . t> u
77.93
7 8 . u b
47. h9
iUb.tU
112. J6
lib. lo
1 Ib.bb
126!32
127.93
134.3V
140.69
1 <+ 3 . b u
1 44 . Jb
1 a 7 . 9 9
19b, 76
203.71
2bl.71
11 l^C.
^iSi
73333
70b63
O& c €> *£
fo f J3 1!> t)
bb354
b H b 7 u
b342 b
4b33b
43b67
4 1 7 u 9
40 J3b
40087
3
. 70
.14
"h4
*9M
.Ib
.69
HK1CE OF HfcHMll
260. b3
2b2.HJ
346.22
4 0 1 . v U
43^.07
441 .06
4b0.73
4 « 0 . 2 J
491 . Ib
604.31
647. Ib
7Ub.bl
1 6 b . 7 u
837.96
1040. b2
1 U 4 9 . 5 b
iUdO.66
1121:'. 4H
137b.b3
17lo!bf
UtMA19^Vb!C3AY
Id^b.'vu
Icsov 7 .riu
loobo.71
1^20*4V
lbbU3.1b
Itb2j. ^9
•- — itS":2"
1263b.U4
12391. b4
12394.3V
1229a.b9
121 7u.3b
!2Ub3.U2
IdUOi .00
-------
Table A-77
M U M S t r< i S b U c. I; =
jviAKKLT iXtm*-h
I- T HI h 1<<
iLlu^i
C A N A J U H U. -< 1 1
HtK^ li*|f- -
^ LITTLt t-4LL->
«3 WUHi-
I ST JUMro Y ILLL
£ urio
T;>-ULb
f 1 HLAl M
ILL UN
CANA JUt-ia« Ir
HthK iMt- >-
LITTLfc l-*LL->
K 0 <* t
b T jot-i!..-) v ILLr
U ( 1 C A
fO T t.Lb
xhb(->UNi>tb Of- ^
70000.
HrtlCt = T 113. U4
*Jh.**iI1 b n()U6rlT
Lbb/OC Y
b^^b . 39
9439.21
9»-.1rJ7 .00
<^b4<;. 7H
7167.00
1 70^0.96
7 1 f- 4 . 0 0
1 U 4 7 U , 7 ^
/ 0 0 0 0 . 0 0
Lbb/UAY
b9^b,39
94J9.21
9 b ^ 7 . 0 0
i!fa4i . 7h
766 7. 00
170bO .96
7164.00
10470 . 12
70000.00
inr!tKb (-UK KUN <;o OF
1 r. ^M= 3 YKb
tuaT
*
b/Oios.oi
106/040.00
i 0 6 b c r, d . 0 0
c:9b ^4ti . Jb
obbi03.69
l9^rsb^d.OO
b09Ht£;.bd
i It) Jb"+b. 00
791^040.00
h/YH
1 7b /o9 . 19
^bl^b4.^3
i; tt 7 0 tt 4 . 19
76huy . tib
?2bb3b . fa9
bO« 770.00
^13b3o.b«
Jl^i'44 . oK
i^()B 74b J . 00
f ,-l t 1"! 0 >~ A W K, P
UN
T*t«iMtNr._
i Hb/D^. r
H 3 b o . b 1
9 6 0 h . f v
9 9 .1 S. , 0 0
b 0 r u , /•» d
6 9 s 1 ,00
1 J9^ 1 , UA
7 (» 4 7 . 0 0
9491 1 . «lb
Xrj^jM io»tto
I.HS/L'wY
1 1 3bc ,bl
Vbi'M . ?9
V9J<^. 00
b 0 1 0 . 'it 'I
69^1 .00
1 3991 .')«*•
7 0 4 7 . U 0
94S*l^.^b
1 b>l>i 7rt . od
tKHlT bYbTtrM
CUbT
3)
91 7 u 0 b
9bOb04
9b£bbb
r i 0 o j
OH 7 704
b9aob«t
7bO« 7b
J394b9b
«b^j030
t/ YK
^4l^0b
^bOo^l
A
. Ob
.94
.bi
. 1«
. 94
.13
. o 0
.00
.2b
. 3 1
.bb
. 75
.69
. Jb
.bO
.Hb
. 00
TUTAL CObl
i'Ol
•-P 0
.00
. 00
i/YK
. Hb
4117 16. 3B
_1 i? 0 7 a^l b . 0 0
433bHiil .00
TOTAL
CUS1=» J4blb^4.00/Yk
-------
Table A-78
wt SH(j!\ibtb OK HlOntKS I" UH HUM <^0 Oh Tut
NU«HtH lbbUt!J= JiOOo. T>.HM= b YNb
MAKKtT C L t A K 1 N d P H 1 C t = * 14J.HO
HI-KHlT bYbTt.M blMULAFlUN
UN I F =LbS/ DA r riH
1*
1
IO
00
1
l_l
N)
f->ULLUThK
Fi HLAif"
ILlU'V
CAlMA.jOhAHl-
htHft iNf- >••
LlTTtt i-.-ALLb
bT JOH'viS V ILL t
U 1' 1 C A
TuULb
t- T H L A i i
I L.I U!»
CAN A vIOn A Kih
ht: Krv 1 WK H
LlTTLt r<,LL-->
r*i.itt-.
bl JOH.shViLLt
u r i c a
T 0 T .. L b
p (-. K Ni I F b oOUbrtT
LHb/uA Y
1 7 4- 9 . b 3
^Ib^.'jb
<:31b.94
^3o0.9f<
7bb7 . 00
1971.^^
1 0 1^6.47
35000. Id.
L.Hb/U*Y
1 /<»9.b3
ft I e ^ . b P
231. b. 9^
9
y ?iitib.31
ir'^U'-^^.bfi
<^ac: ^bb.Hw
^* f ?a .«i
JCJ49 f D .««
lJi:77Ub.oo
rwfci I iv tN F
LbS/UaY
Ibb39 .4b
1 btt^h . .51
17^f i. Ub
b41k^. O^1
b9uil . OU.....
iJ * 3 ^ H . 7 b
••>b^
l434c:«->l.UO
ib!9D 7tt. 01)
i»/£!b^b. 00
1 lt«9 1 .4*
19/ObOb.OO
I49f COO. 00
J<*4u3^c:.00
iJ034blJ.OO
ib/YK
3 Co3b£j. 1 9
40000J. 19
493970 .bb
30 J09. tib
e!3f 1 Cb . b9
Dl9ol 1 . h«
39<+300.n3
90 /bb«*. 1 9
3430494. 00
TOTAL COSI
J>
1 bHbflb«* .00
-------
The following three pages contain Tables A-79, A-80,
and A-81 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." Table A-79 gives the aggregate demand
schedule for permits from computer run 27. Tables A-80 and
A-81 give the market-clearing results for computer run 27
when the supply of permits is set at 70,000 and 35,000 pounds
per day of BP respectively. The contents of all three tables
are described in more detail in Section 6 of this report.
A-98-13
-------
Table A-79
ID
00
I
Ab6H
,ce: u
i
i
i
i
i
i
i
i
i
i
i
i
i
i
i
2
tGATt OtMANL) SCHtDULt FCiK
HUN S. f UK Tdt MUHAWK 1
>F Pt-HMH UtMAND»LttS/lMY
0.
69.
bl.
94.
97.
01.
U4 .
10.
12.
15.
15.
25.
25.
26.
32.
38.
55.
73.
til.
97.
02.
238.
279.
j
04.
U
36
44
05
87
91
99
21
18
56
6b
24
«3
12
tti
47
Ul
51
bl
«3
94
o2
7D
13
Il/d02
100J39
92585
b36lb
bObb*
7b7u3
70H31
61777
57695
53064
52b69
37334
, 3o557
3b222
3J792
3306U
29417
2b31d
24045
21730
21463
19971
19039
Id259
*
•
•
•
•
•
•
*
•
•
*
*
*
*
*
*
*
*
*
*
•
*
*
•
00
19
19
19
db
bb
13
25
31
04
79
32
5d
91
09
25
64
57
56
54
69
97
B9
10
PHICE Of- i
310
357
369
379
396
39«
437
515
574
614
643
6/2
72o
741
9u f
937
94^
9*o
966
9f4
9B2
99',
.. _,. ._.. -I04_5
1262
15d7
PfrKMl 1 SY
STtM SlMUL
A 1 ION
PhHMIT UtMANL)»Lbb/!JA Y
.^1
.47
.90
.52
.33
.H6
.13
.37
.20
.1(1
.39
,4tt
.61
.45
.26
. n6
.52
.10
.59
.40
.33
.19
^.7.7.
.94
.37
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
L
1
1
1
1
7909
605f
6519
GdOt
5« 73
sbbl
br>3b
49^d
4f 66
t^bc!
4102
3*54
Jb/ 1
3c01
2/^bJ
2o4j
2641
2o2u
2b94
2*o/
23b9
£d^d
cLLtid
di09
2U01
. bb
. bu
. 19
,b4
.0«
.02
."2
.4b
.')2
.bb
.bl
. nb
.25
.37
.55
.34
.56
.92
.H9
.30
.M5
.4U
.13
.50
.00
-------
Table A-80
bfc b- UK H lUOt Kb HOH HUN t I OF I ft
(i>i>Utu= foOOo. Tt.KM= b YKb
M A H * t T C L t. A H
HOLLUlt«
r
CANA JUrittHl1-
Mf^KlMt. n
LlTTLt I-
(j\
u r i c u
f- r
ILIUN
LHTLt t-'ALLb
HUMt
sr
ui ICA
PfcKMlT bVbTtM SIMULATION
UN 1T=Lbb/UAr HH
HlNO H-^ICc^* 10b. ^7
Mtw^lTb c^UUbnT
L H b / u fi Y
bbO J. OS*
6hd7.9b
bb3b .07
866^.37
.1 7bb7.00
17147.6?
-Lit 71fc4.00
l^^^l .73
/ 0 0 0 0 . U 0
LBb/OAY
7 ft b 7 » 0 0
17l4?.b^
LLt 71*- 4. 00
l4r>9 1 . 13
i'0000.00
CubT I Ht A 1 k"-tNr CUbl
± LHb/DflY 4
b«0407.bb 117hb.91 blblciO.HO
^..yyjji^.y^ 1^4c'0.0<^ 10fo3490.00
V00^94.«« Ilif^^.y3 tty3DttB .94
4.7b 90b^^.^b b7bA30.69
194/394. OU IbBtf/'b.bb- lo9D4ib.OO
TOTAL COSf
1>
139Ob^B. 00
17biib39. 00
1793Bo3. 00
34bO^
-------
Table A-81
= 3-3000.
Ot- bloutkS f- OH KUN 'd I ot-
TtKiv = b
MUr»A*K HtKMiT bYSTt.M b I MIJl_ A T 1 UN
UNITr-Lbi/UAY OK
MMKKEI CLtAKlw
HuLLOTtK
j- T i^LAliv
IL I'J'M
CArNAjOhA*!!-
K,, HfekK, IMF-(
1 LITTLt hALL^
VD
00 HO Me.
' b f J 0 rl iv S V 1 L L r
en UTICfi
TOTALS
FT HLAl.Ni
IUlUi\l
CANAJOHnHiE
Ht.rtrt jMt.r<
LITfLt HALLS
HOME.
ST JOHiMbvlLLt
01 1C .6
TOTSLb
^' ^ICt = % I**-*'
Htr HM 1 I b bOObHT
LUb/U/i Y
1 y >• 9 . 7 . u U
6 M 0 9 . 9 6
£^f-(J . 70
^^9^. JV
JbOOO.Ol
LHb/OA Y
1 b b V . c! 1 •
^33d.bfc
£467. IH
23^1 . uO
76^ ? . Of)
bHiW . -yb
2b60.70
889^.09
3bOOO . Ul
COST
4
£ 4 4 b c1 b . 0 U
30/ YK
643 J£. 6 f"
796B8.31
84«: /b.bJ
bl33i ,e£5
^6iti9^.bl
is:3«;t>l9.DU
b/4/0. Ji
3 0 3 7 4 £ . 0 b
i IVbbba .uu
T'-t -• 1 ."tM
LHS/i;A Y
1^349. Ml
Ib?!1-).!!
1 ( I; ^ 1 . b 4^4^ . t)»t
1 1 bb 0_. J_0
9b49^ . HH
193H ^B.bB
Lttb/L **Y
lb31-»4.Htl
IbMb.ll
1 Mtvl .bd
bJJ^.OO
69bl .00
^ 4 ^ ^ ^ . ii 4
1 IbbO. JO
M649b.df1
1^38 /b.bfi
COST
i
Id3olb9 .00
IbJbbM.OO
iDy J / 74 . 00
VbcbO .CD
/ lbe>60 . 94
lib-* Ibo . 00
j£Jlb-54£.00
i i£l4 J
-------
The following nine pages contain Figures A-l through
A-9 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." They all correspond to computer run 1 of
the Mohawk permit system simulation. Figures A-l through
A-8 are the demand curves for the eight cities in the Mohawk
River system. Figure A-9 is the aggregate demand curve for
the system. All figures are described in more detail in
Section 6 of this report.
A-99
-------
Figure A-l
DEMAND CURVE OF FORT PLAIN FOR RUN 1
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=FT PLflIN
POLLUTflNT=BOD
RUN NO. 1
80.00
160.00 2MO.OO 320.00
DEMflND, LBS/DflY
WO. 00 180.0(
A-100
-------
Figure A-2
DEMAND CURVE OF ILION FOR RUN 1
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
o
DEMflNO FOR 5 YR EFFLUENT PERMITS
POLLUTER=ILION
POLLUTflNT=BOO
RUN NO. 1
120.00
DEMflND. LBS/DflY *10
A-101
-------
Figure A-3
DEMAND CURVE OF CANAJOHARIE FOR RUN 1
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
PGLLUTER=CRNflJOHflRIE
POLLUTRNT=BOD
RUN NO. 1
00
20.00 UO.OO 60.00 80.00
DEMflND, LBS/DflY *1(T
100.00 120.00
A-102
-------
Figure A-4
DEMAND CURVE OF HERKIMER FOR RUN 1
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=HERKIMER
POLLUTflNT=BOD
RUN NO. 1
80.00
160.00 240.00 320.00
DEMflND, LBS/DflY
MOO.OO 480.00
A-103
-------
Figure A-5
DEMAND CURVE OF LITTLE FALLS FOR RUN 1
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
•
o
ev
o
o
•
o
o.
o
o
*
o.
00
X0
o
.-.CD.
CJ
o
S
o
o
9
o.
f\l
o
o
DEMRND FOR 5 YR EFFLUENT PERMITS
POLLUTER=LITTLE FflLLS
POLLUTflNT=BOD
RUN NO. 1
oo
20.00 MO.00 60.00
DEMflND, LBS/DflY
80.
00
l
100.00 120.00
A-104
-------
Figure A-6
DEMAND CURVE OP ROME FOR RUN 1
OF THE MOHAWK PERMIT SYSTEM SIMULATION
a
o
o
*
(M
o
o
(M
Ig
*
III
o
o
OJ
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=ROME
POLLUTflNT=BOD
RUN NO. I
.00
-557^H>0700 i50:00 200.00 250.00
DEMflND, LBS/DflY *10l
300.00
A-10 5
-------
Figure A-7
DEMAND CURVE OF ST. JOHNSVILLE FOR RUN 1
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=ST JOHNSVILLE
PQLLUTRNT=BOD
RUN NO. 1
•V.oo
20.00 40.00 60.00
DEMflND, LBS/DflY
80.
00
1
100.00 120.00
A-106
-------
Figure A-8
DEMAND CURVE OF UTICA FOR RUN 1
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=UTICfl
POLLUTflNT=BOD
RUN NO. I
10.00 20.0030.00
DEMflND, LBS/DflY
•40.00
50.00
60.00
A-107
-------
Figure A-9
AGGREGATE DEMAND FOR EFFLUENT PERMITS
O
o
flGGREGflTE DEMRNO FOR EFFLUENT PERMITS
NO. OF POLLUTERS=8
POLLUTflNT=BOD
RUN NO. 1
•V.oo
40.00
120.00Teo-oo
DEMflND, LBS/DflY *102
80.00
200.00
240.00
A-108
-------
The following nine pages contain Figures A-10 through
A-18 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." They all correspond to computer run 3 of
the Mohawk permit system simulation. Figures A-10 through
A-17 are the demand curves for the eight cities in the
Mohawk River system. Figure A-18 is the aggregate demand
curve for the system. All figures are described in more
detail in Section 6 of this report.
A-109
-------
Figure A-10
DEMAND CURVE OF FORT PLAIN FOR RUN 3
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
*
o
to
o
o
•
o
in
o
o
•
o
•ae
M
O
LU
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=FT PLflIN
POLLUTflNT=BOD
RUN NO. 3
^.00
10.00 20.00 30.00 UO.QO
DEMflND, LBS/DflY ""^
50.00
60.00
A-110
-------
Figure A-11
DEMAND CURVE OF ILION FOR RUN 3
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
OEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=ILION
POLLUTflNT=BOD
RUN NO. 3
50.00
60.00
-------
Figure A-12
DEMAND CURVE OF CANAJOHARIE FOR RUN 3
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=CflNflJOHflRIE
PGLLUTflNT=BOD
RUN NO. 3
10.00 20.00 30.00
DEMflND. LBS/DflY
40.00
50.00
60.00
A-112
-------
Figure A-13
DEMAND CURVE OP HERKIMER FOR RUN 3
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
o
DEMflND FOR 5 YR EFFLUENT PERMITS
PGLLUTER=HERKIMER
POLLUTRNT=BOD
RUN NO. 3
V.OO
80.00
160.00 2'UO.OO 320.00 MOO.00
DEMflND, LBS/DflY
480.00
A-113
-------
Figure A-14
DEMAND CURVE OF LITTLE FALLS FOR RUN 3
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
•
o
CM.
O
o
»
o
o
o
o
•
o
00
LU
*-«o
oc •
0.0
o
o
*
o
(V
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=LITTLE FflLLS
POLLUTflNT=BOO
RUN NO. 3
80.00 160.00 240.00 320.00
DEMflND, LBS/DflY *10!
1100.00 480.00
A-114
-------
Figure A-15
DEMAND CURVE OF ROME FOR RUN 3
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=ROME
POLLUTRNT=BOD
RUN NO. 3
10.00 20.00 30.00
DEMflND, LBS/DflY
10.00
*
50.00
60.00
A-115
-------
Figure A-16
DEMAND CURVE OF ST. JOHNSVILLE FOR RUN 3
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=ST JOHNSVILLE
POLLUTflNT=BOO
RUN NO. 3
80.00 160.00 240.00
DEMflND. LBS/DflY
320.00
*10l
400.00 480.00
A-116
-------
Figure A-17
DEMAND CURVE OF UTICA FOR RUN 3
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflNO FOR 5 YR EFFLUENT PERMITS
POLLUTER=UTICfl
POLLUTflNT=BOD
RUN NO. 3
10.00 20.00 30.00
DEMflND. LBS/OflY
UO.OO
*1CT
50.00
60.00
A-117
-------
Figure A-18
AGGREGATE DEMAND FOR EFFLUENT PERMITS
o
o
•
o
to
o
o
•
o
in
o
o
•
o
a1
«M
O
flGGREGflTE DEMflND FOR EFFLUENT PERMITS
NO. OF POLLUTERS=8
POLLUTflNT=BOD
RUN NO. 3
00
80.00 160.00 2140.00
DEMflND, LBS/DflY
320.00 400.00 480.00
A-118
-------
The following nine pages contain Figures A-19 through
A-27 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." They all correspond to computer run 4 of
the Mohawk permit system simulation. Figures A-19 through
A-26 are the demand curves for the eight cities in the Mohawk
River system. Figure A-27 is the aggregate demand curve for
the system. All figures are described in more detail in
Section 6 of this report.
A-119
-------
Figure A-19
DEMAND CURVE OF FORT PLAIN FOR RUN 4
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
«
o
ST
CM
O
O
*
o
o
CM
O
O
•
O
to
o
o
•
o.
o
o
DEMflND FOR 1 YR EFFLUENT PERMITS
POLLUTER=FT PLflIN
POLLUTRNT=BOO
RUN NO. 4
00
80.00 160.00 240.00 320.00
DEMflND, LBS/DflY
400.00 480.00
A-120
-------
Figure A-20
DEMAND CURVE OF ILION FOR RUN 4
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 1 YR EFFLUENT PERMITS
POLLUTER=ILION
POLLUTflNT=BOD
RUN NO. 14
20.00 10.00 60.00
DEMflND, LBS/DflY
80.00
1
100.00
120.00
A-121
-------
Figure A-21
DEMAND CURVE OF CANAJOHARIE FOR RUN 4
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 1 YR EFFLUENT PERMITS
POLLUTER=CflNflJOHflRIE
POLLUTflNT=BGD
RUN NO. H
20.00 40.00 60.00 80.00
DEMflND. LBS/DflY *10l
100.00 120.00
A-12 2
-------
Figure A-22
DEMAND CURVE OF HERKIMER FOR RUN 4
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 1 YR EFFLUENT PERMITS
PGLLUTER=HERKIMER
POLLUTflNT=BOO
RUN NO. 4
80.00
160.00 2*40.00 320.00
OEMflND, LBS/OflY
400.00 480.00
A-12 3
-------
Figure A-23
DEMAND CURVE OF LITTLE FALLS FOR RUN 4
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
o
*
o
o
CO
o
o
«
o
in
CM
o
o
•
o
o
CM
•o
UJtn.
O—
»—i
QC
O-o
o
*
o
o j
o
o
•
o.
in
o
o
DEMflND FOR 1 YR EFFLUENT PERMITS
POLLUTER=LITTLE FflLLS
POLLUTflNT=BOD
RUN NO. U
^.00
20.00 10.00 60.00
DEMflND. LBS/DflY
80.
00
1
100.00 120.00
A-12 4
-------
Figure A-24
DEMAND CURVE OF ROME FOR RUN 4
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 1 YR EFFLUENT PERMITS
POLLUTER=RQME
POLLUTflNT=BOD
RUN NO. li
50 00 100.00 150.00
OEMRND, LBS/DflY
200.00
*10l
250.00 300.00
A-12 5
-------
Figure A-25
DEMAND CURVE OF ST. JOHNSVILLE FOR RUN 4
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 1 YR EFFLUENT PERMITS
POLLUTER=ST JOHNSVILLE
POLLUTflNT=BOD
RUN NO. 4
20.00 MO.00 60.00
OEMflND. LBS/DflY
80.
00
1
100.00120.00
A-126
-------
Figure A-26
DEMAND CURVE OF UTICA FOR RUN 4
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 1 YR EFFLUENT PERMITS
POLLUTER=UTICfl
PGLLUTflNT=BOD
RUN NO. U
10.00 20.00 30.00 W.QO
DEMflND, LBS/DflY *10*
50.00
60.00
A-12 7
-------
Figure A-27
AGGREGATE DEMAND FOR EFFLUENT PERMITS
o
o
*
o
ST
ru
o
o
*
o
o
cv
o
o
*
o
to
o
LU
00
•-•o
QC •
ft O
"-OD
RGGREGRTE DEMflND FOR EFFLUENT PERMITS
NO. OF POLLUTERS=8
POLLUTflNT=BOD
RUN NO. 14
10.00 80.00 120.00
DEMflND. LBS/DflY
160.00
200.00
A-128
-------
The following nine pages contain Figures A-28 through
A-36 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." They all correspond to computer run 5 of
the Mohawk permit system simulation. Figures A-28 through
A-35 are the demand curves for the eight cities in the Mohawk
River system. Figure A-36 is the aggregate demand curve for
the system. All figures are described in more detail in
Section 6 of this report.
A-12 9
-------
Figure A-28
DEMAND CURVE OF FORT PLAIN FOR RUN 5
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
*
o
(M.
DEMflND FOR 10 YR EFFLUENT PERMITS
POLLUTER=FT PLflIN
POLLUTflNT=BOD
RUN NO. 5
o
o
*
o
o.
o
o
*
o.
to
-------
Figure A-29
DEMAND CURVE OF ILION FOR RUN 5
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 10 YR EFFLUENT PERMITS
POLLUTER=ILION
POLLUTflNT=BOD
RUN NO. 5
1.00
20 00 «0.00 60.00 80.00
DEMflND. LBS/DflY *10l
100.00 120.00
A-131
-------
Figure A-30
DEMAND CURVE OF CANAJOHARIE FOR RUN 5
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
o
DEMflND FOR 10 YR EFFLUENT PERMITS
POLLUTER=CflNRJOHflRIE
POLLUTflNT=BOD
RUN NO. 5
20.00 40.00 60.00
DEMflND, IBS/DRY
8*0.00
*10l
100.00 120.00
A-132
-------
Figure A-31
DEMAND CURVE OF HERKIMER FOR RUN 5
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflNO FOR 10 YR EFFLUENT PERMITS
POLLUTER=HERKIMER
POLLUTflNT=BOD
RUN NO. 5
80.00
160 00 240.00 320.00 400.00
DEMflND. LBS/DflY
480.00
A-133
-------
o
o
•
o
3*.
r\i
o
o
*
o
o.
C\l
o
o
•
o
03.
Figure A-32
DEMAND CURVE OF LITTLE FALLS FOR RUN 5
OF THE MOHAWK PERMIT SYSTEM SIMULATION
DEMflNO FOR 10 YR EFFLUENT PERMITS
POLLUTER=LITTLE FflLLS
POLLUTRNT=BOD
RUN NO. 5
UJ
cc
'o
'o
:oj
•oo
o
o
*
o.
o
o
^.00
20.00 40.00 60.00
DEMflND, LBS/DflY
80.
00
1
100.00 120.00
A-134
-------
Figure A-33
DEMAND CURVE OP ROME FOR RUN 5
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
(VI
o
o
*
o
o
o
o
•
o
(O
o
7°
*o
•
o
»«
*
u
o
o
*
o.
o
o
OEMflND FOR 10 YR EFFLUENT PERMITS
POLLUTER=ROME
POLLUTRNT=BGD
RUN NO. 5
V-OO
50.00 100.00150.00200.00 250.00 300.00
DEMRND, LBS/OflY xlO1
A-135
-------
Figure A-34
DEMAND CURVE OF ST. JOHNSVILLE FOR RUN 5
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
«
o
GO.
sr
o
o
*
o
o
o
o
*
o
CM
en
o
LU
<->§
•—• .
CEO
O
o
•
o
CO
o
o
DEMflND FOR 10 YR EFFLUENT PERMITS
POLLUTER=ST JOHNSVILLE
POLLUTflNT=BOD
RUN NO. 5
20.00 40.00 60.00
DEMflND. LBS/DflY
80.
00
1
100.00 120.00
A-136
-------
Figure A-35
DEMAND CURVE OF UTICA FOR RUN 5
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
•
o
a1.
(V
o
o
•
o
o
(V
o
o
*
o
ID
LJJ
o
o
•
o.
o
o
DEMflND FOR 10 YR EFFLUENT PERMITS
POLLUTER=UTICfl
POLLUTflNT=BOD
RUN NO. 5
10.00 20.00 30.00 40.00
DEMflND, LBS/DflY »l£T
50.00
60.00
A-137
-------
Figure A-36
AGGREGATE DEMAND FOR EFFLUENT PERMITS
o
o
*
o
CM.
O
O
*
O
o.
o
o
*
o
00
(W
o
UJ
o_2-
O
o
•
o
CM
o
o
flGGREGflTE DEMflND FOR EFFLUENT PERMITS
NO. OF POLLUTERS=8
POLLUTflNT=BOD
RUN NO. 5
40.00 80.00 120.00 160.00
DEMflND, LBS/DflY *102
200.00 240.00
A-138
-------
The following nine pages contain Figures A-37 through
A-45 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." They all correspond to computer run 6 of
the Mohawk permit system simulation. Figures A-37 through
A-44 are the demand curves for the eight cities in the Mohawk
River system. Figure A-45 is the aggregate demand curve for
the system. All figures are described in more detail in
Section 6 of this report.
A-139
-------
Figure A-37
DEMAND CURVE OF FORT PLAIN FOR RUN 6
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
•
o
f\J.
o
o
•
o
o
o
o
*
o
CO
X0
o
o
•—i
oc
o
o
*
"o.
o
o
*
o
CM
o
o
DEMflND FOR 15 YR EFFLUENT PERMITS
POLLUTER=FT PLflIN
POLLUTflNT=BOD
RUN NO. B
80.00 160.00 240.00 320.00
DEMflND. LBS/DflY
400.00 480.0
A-140
-------
Figure A-38
DEMAND CURVE OP ILION FOR RUN 6
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 15 YR EFFLUENT PERMITS
POLLUTER=ILION
POLLUTflNT=BOD
RUN NO. 6
20 00 40.00 60.00 80.00
DEMflNO. LBS/DflY *10l
100.00
120.00
A-141
-------
Figure A-39
DEMAND CURVE OF CANAJOHARIE FOR RUN 6
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
o
DEMflND FOR 15 YR EFFLUENT PERMITS
POLLUTER=CflNflJOHflRIE
POLLUTflNT=BOD
RUN NO. 6
oo
20.00 40.00 60.00
DEMflND, LBS/DflY
80.00
*
100.00 120.00
A-142
-------
Figure A-40
DEMAND CURVE OP HERKIMER FOR RUN 6
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
o
OEMflNO FOR 15 YR EFFLUENT PERMITS
POLLUTER=HERKIMER
POLLUTflNT=BOO
RUN NO. 6
80.00
160.00 240.00 320.00
DEMflND. LBS/OflY
400.00 480.00
A-143
-------
Figure A-41
DEMAND CURVE OP LITTLE FALLS FOR RUN 6
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
•
o
=r.
tv
o
o
•
o
o.
r\t
o
o
*
o
(O
o
4A fV
*" ••«
o
°
co
o
o
*
o.
o
o
DEMflND FOR 15 YR EFFLUENT PERMITS
POLLUTER=LITTLE FflLLS
POLLUTflNT=BOD
RUN NO. B
20.00 40.00 60.00
DEMflND, LBS/DflY
80.00
xlO1
100.00 120.00
A-144
-------
Figure A-42
DEMAND CURVE OF ROME FOR RUN 6
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
*
o
o.
tn
o
o
*
o
in
cv
o
o
•
o
o
(M
oco
0.0
o
o
•
o
in
o
o
DEMflND FOR 15 YR EFFLUENT PERMITS
POLLUTER=ROME
POLLUTflNT=BOO
RUN NO. 6
SO 00 100.00 150.00
DEMflNO. LBS/DflY
200.00
*10l
250.00 300.00
A-145
-------
Figure A-43
DEMAND CURVE OF ST. JOHNSVILLE FOR RUN 6
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
«
o
03.
O
O
*
O
o.
o
o
*
o
§
pMMf ^
oco
o
o
•
o
00
o
o
DEMflND FOR 15 YR EFFLUENT PERMITS
POLLUTER=ST JOHNSVILLE
POLLUTflNT=BOD
RUN NO. 6
20.00 40.00 60.00
DEMflNO, LBS/DflY
80.00
1
100.00 120.00
A-146
-------
Figure A-44
DEMAND CURVE OF UTICA FOR RUN 6
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 15 YR EFFLUENT PERMITS
POLLUTER=UTICfl
POLLUTflNT=BOO
RUN NO. 6
10.00 20.00 30.00
OEMflND. LBS/DflY
60.00
A-14 7
-------
Figure A-45
AGGREGATE DEMAND FOR EFFLUENT PERMITS
o
o
o
o
•
o
o_
o
o
»
o
CD
iw
O
«—«
X0
O
LU
o
o
*
o
cv
o
o
flGGREGflTE DEMflND FOR EFFLUENT PERMITS
NO. OF POLLUTERS=8
POLLUTRNT=BOD
RUN NO. 6
40.00 80.00 120.00 160.00 200.00 240.0
DEMflND, IBS/DRY *102
A-148
-------
The following nine pages contain Figures A-46 through
A-54 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." They all correspond to computer run 12
of the Mohawk permit system simulation. Figures A-46 through
A-53 are the demand curves for the eight cities in the Mohawk
River system. Figure A-54 is the aggregate demand curve for
the system. All figures are described in more detail in
Section 6 of this report.
A-149
-------
Figure A-46
DEMAND CURVE OF FORT PLAIN FOR RUN 12
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
•
o
tu.
o
o
•
o
o
o
o
o.
CO
ID
70
o
*
o_
LU
o
o
*
o
CM
o
o
OEMRNO FOR 5 YR EFFLUENT PERMITS
POLLUTER=FT PLflIN
POLLUTBNT=BP
RUN NO. 12
20.00 40.00 60.00
DEMflND. LBS/OflY
80.00
^
100.00 120.00
A-150
-------
Figure A-47
DEMAND CURVE OF ILION FOR RUN 12
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
*
o
IV.
o
o
•
o
o
o
o
*
o
CD
*0
o
*
UJ
£
o
o
*
o
CM
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=ILION
POLLUTflNT=BP
RUN NO. 12
20 00 «iO.OO 60.00 80.00
DEMflNO, LBS/DflY ilO1
100.00 120.00
A-151
-------
Figure A-48
DEMAND CURVE OF CANAJOHARIE FOR RUN 12
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
*
o
CM.
O
O
•
O
o.
o
o
*
o.
00
o
*—<
X0
o
•
o.
•-•o
O
O
•
o
CM
o
o
DEMRND FOR 5 YR EFFLUENT PERMITS
POLLUTER=CflNRJOHflRIE
POLLUTflNT=BP
RUN NO. 12
20.00 40.00 60.00
DEMflND, LBS/OflY
80.00
*l(r
100.00 120.00
A-152
-------
Figure A-49
DEMAND CURVE OF HERKIMER FOR RUN 12
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
*
o
CM.
O
O
•
o
o
o
a
•
o
a
X0
o
LJ
^
O
O
o
CM
O
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=HERKIMER
POLLUTflNT=BP
RUN NO. 12
80.00 160.00 2MO. 00
OEMflNO. LBS/DflY
320.00 MOO.00 480.00
A-153
-------
Figure A-50
DEMAND CURVE OF LITTLE FALLS FOR RUN 12
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
•
o
CM.
O
O
*
O
o
o
o
*
o.
03
X0
o
•
o_
LU
o
o
•
o
CM
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=LITTLE FflLLS
POLLUTflNT=BP
RUN NO. 12
20.00 40.00 60.00 80.00
DEMflND, LBS/DflY xlO1
100.00 120.00
A-15 4
-------
Figure A-51
DEMAND CURVE OF ROME FOR RUN 12
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
*
o
o.
CO
o
o
*
o
in
CM
o
o
•
o
o
cv
Win.
U-
i—i
GC
0-0
O
•
o
o.
o
o
o'
in
o
o
OEMflND FOR S YR EFFLUENT PERMITS
POLLUTER=ROME
PGlLUTflNT=BP
RUN NO. 12
"•"DENflSb" LBS/OflY
240.00
A-155
-------
Figure A-52
DEMAND CURVE OF ST. JOHNSVILLE FOR RUN 12
OF THE MOHAWK PERMIT SYSTEM SIMULATION
§ DEMflND FOR 5 YR EFFLUENT PERMITS
o POLLUTER=ST JOHNSVILLE
POLLUTflNT=BP
RUN NO. 12
o
o
•
o
OJ
o
o
*
o.
CD
O
x<
o
o
*
o.
(V
o
o
20.00 40.00 60.00 80.00 100.00 120.00
DEMflND, LBS/DflY xlO^
A-156
-------
Figure A-53
DEMAND CURVE OF UTICA FOR RUN 12
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=UTICfl
POLLUTflNT=BP
RUN NO. 12
"b'.oo
10.00 20.00 30.00
OEMRND. LBS/DflY
50.00
60.00
A-157
-------
Figure A-54
AGGREGATE DEMAND FOR EFFLUENT PERMITS
o
o
flGGREGflTE DEMflND FOR EFFLUENT PERMITS
NO. OF POLLUTERS=8
POLLUTflNT=BP
RUN NO. 12
20.00 40.00 60.00 80.00
DEMflND. LBS/DflY *10*
100.00 120.00
A-158
-------
The following nine pages contain Figures A-55 through
A-63 of the Meta Systems Inc report, "Marketable Effluent
Permit Systems." They all correspond to computer run 18
of the Mohawk permit system simulation. Figures A-55 through
A-62 are the demand curves for the eight cities in the Mohawk
River system. Figure A-63 is the aggregate demand curve for
the system. All figures are described in more detail in
Section 6 of this report.
A-159
-------
Figure A-55
DEMAND CURVE OF FORT PLAIN FOR RUN 18
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
o
•
o
a1.
CM
O
O
*
O
o.
CM
O
(O.
O
LU
O,
o
o
*
o.
o
o
DEMflNO FOR 5 YR EFFLUENT PERMITS
POLLUTER=FT PLflIN
POLLUTRNT=BOD
RUN NO. 18
^.00
80.00 160.00 240.00 320.00 400.00
DEMflND, LBS/DflY
480.0(1
A-160
-------
Figure A-56
DEMAND CURVE OP ILION FOR RUN 18
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
a
*
o
M
O
O
*
O
o
o
o
•
a
CO
w*
O
T~I
X0
o
LU
o
o
oj
o
o
OEMflND «BLSTTERR_EFFLUEHT PERMITS
POLLUTflNT=BOD
RUN NO. 18
20.00 40.00 60.00
OEMflND, LBS/DflY
80.00
1
100.00
120.00
A-161
-------
Figure A-57
DEMAND CURVE OF CANAJOHARIE FOR RUN 18
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
*
o
CM
O
O
•
O
o
o
o
•
o.
CO
«•*
o
•—I
X0
O
^vOJ
LU
o
o
pj
o
o
OEMflNO FOR 5 YR EFFLUENT PERMITS
POLLUTER=CflNFUGHflRIE
POLLUTflNT=BOD
RUN NO. 18
20.00 40.00 60.00
DEMflNO, LBS/DflY
80.
00
1
100.00 120.00
A-162
-------
Figure A-58
DEMAND CURVE OF HERKIMER FOR RUN 18
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
O
*
O
Of.
CM
O
O
*
O
O.
CM
O
O
*
O
CO,
o
o
•
O
UJ
u.
O
O
oJ
O
O
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=HERKIMER rcnnilD
POLLUTflNT=BOO
RUN NO. 18
80.00
160.00 ^io7oO 320.00
DEMflND. LBS/DflY
400.00 480.00
A-16 3
-------
Figure A-59
DEMAND CURVE OF LITTLE FALLS FOR RUN 18
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
•
o.
(O
o
o
•
o.
I/)
o
o
o_
O
o
»
LU
o
o
*
o.
o
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=LITTLE FflLLS
PGLLUTflNT=BOD
RUN NO. 18
20.00 40.00 60.00
DEMflND. LBS/DflY
80.00
1
100.00 120.00
A-164
-------
Figure A-60
DEMAND CURVE OP ROME FOR RUN 18
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
O
*
O.
(O
O
O
•
O
in
o
o
o
X0
o
^d.
LU
U
o
o
O
o
o
OEMfiND Fp«RL5TTEB EFFLUENt PERMITS
POLLUTflNT=BOO
RUN NO. 18
50.00lbo.00150.00200.00250.00 300.00
OEMflND. LBS/DflY *10!
A-165
-------
Figure A-61
DEMAND CURVE OF ST. JOHNSVILLE FOR RUN 18
OF THE MOHAWK PERMIT SYSTEM SIMULATION
o
o
*
o
CM.
O
O
*
O
o.
o
o
•
o
CO
f»
o
«—«
*o
o
o.
ft
LU
£2
o
o
•
o
rsi
o
o
DEMflNO FOR 5 YR EFFLUENT PERMITS
POLLUTER=ST JOHNSVILLE
POLLUTflNT=BOD
RUN NO. 18
20.00 40.00 60.00 80.00
DEMRND, LBS/DflY *10l
100.00
120.00
A-166
-------
Figure A-62
DEMAND CURVE OF UTICA FOR RUN 18
OF THE MOHAWK PERMIT SYSTEM SIMULATION
O
o
DEMflND FOR 5 YR EFFLUENT PERMITS
POLLUTER=UTICfl
POLLUTRNT=BGO
RUN NO. 18
10.00 20.00 30.00
DEMfiND. LBS/DflY
qo
*
50.00
60.00
A-167
-------
Figure A-63
AGGREGATE DEMAND FOR EFFLUENT PERMITS
o
o
•
o
=f.
cu
o
o
•
o
o.
CJ
o
o
*
o
(O.
RGGREGflTE DEMflNO FOR EFFLUENT PERMITS
NO. OF POLLUTERS=8
POLLUTRNT=BOD
RUN NO. 18
•—«o
CE_
o
o
o.
o
o
^.00
40.00 80.00 120.00 160.00
DEMflNO. LBS/OflY *102
200.00 240.00
A-168
-------
SELECTED WATER
RESOURCES ABSTRACTS
INPUT TRANSACTION FORM
AN EVALUATION OF MARKETABLE EFFLUENT PERMIT SYSTEMS
W
Russell J. deLucia
Meta Systems, Inc.
843 Massachusetts Avenue
Cambridge, Mass. 02139
5. JkeportDate
i,
8. ] "form .^Orga, tation
Repot* No.
n.
Environmental Protection Agency
68-01-1882
1.. Typ, (Rep: and
Period Cohered
Final Report
Environmental Protection Agency repott number, EPA-600/5-7U-030, September 19tU
This report is a study of the practical problems and prospects of using
marketable effluent permits (MEP) as a water pollution control tool. Under such
a system, pollution rights are contingent upon possession of permits; the permits
are acquired and/or traded through an auction or market. This study details the
requirements of MEP systems, discusses their theoretical advantages, and examines
them through the use of industrial organization theory, comparisons with analogous
markets, and a simulation model. The simulation model employs Mohawk River data
to determine the effect of different system parameters on the operation of a
MEP system. The legal and administrative aspects of the marketable permit system
are also dealt with. The conclusion is that marketable permits are a promising
control tool for many river basins.
17s. Descrifitots
" 19. * Security Class.
(Repot )
"•0. Sc '.rityC' -s.
(Page)
21. No. of
Pages
Pi ti
Send To:
WATER RESOURCES SCIENTIFIC INFORMATION CENTER
US DEPARTMENT OF THE INTERIOR
WASHINGTON. D C. 2O24O
Russell J. deLucia
Meta Systems, Inv._
------- |