Cost-Effective Pollution Control in Rivers

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The analysis focuses on the cost-effectiveness of BOD5 control methods in the Bío Bío river basin, comparing standard control policies with a market system. While theoretical models suggest the market system is efficient, it falters under strict compliance with environmental targets, leading to a reduction in permits. This study highlights that at certain environmental demand levels, transferable discharge permits become inefficient due to factors such as water system restrictions, high marginal abatement costs from polluting sources, and the limited capacity of receiving waters.