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Water quality trading in Jordan Lake, North Carolina: economic, hydrological, behavioral, and ecological aspects

Date

2015

Authors

Motallebi, Marzieh, author
Hoag, Dana L., advisor
Loomis, John B., committee member
Arabi, Mazdak, committee member
Boone, Randall B., committee member

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Journal ISSN

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Abstract

I chose to use the three-manuscript option for my dissertation. The three topics addressed are related to water quality trading (WQT) in Jordan Lake, North Carolina. My goal was to advance our understanding of WQT programs and to provide practical, realistic information that policy makers in North Carolina could use in implementing the program in Jordan Lake, and other regions that may come along. Each topic and the resulting policy implications are relevant to stakeholders at the local and state levels. There is some redundancy in the articles, as each is written to stand alone and be submitted to an academic journal after my dissertation is finalized. Individual abstracts for each study follow: ECONOMIC PERAPECTIVE OF WATER QUALITY TRADING PROGRAM Nutrient pollution is a crucial issue for the Jordan Lake, NC. A WQT program is one of the main policies that have been suggested to address water quality, especially in the face of a rapidly growing urban sector that requires options to reduce its delivery of nutrients. Although a WQT program is appealing in theory, it has thus far failed to prove feasible in several attempts in the United States. This dissertation identifies and evaluates factors, called wedges that diminish the chance of WQT program’s success in Jordan Lake. The study shows why and how geographical, economic, and behavioral factors should be considered before implementing the emerging program in Jordan Lake. A unified economic model was designed to examine how economic and non-economic factors can undermine an ideal WQT market, and in many cases make it infeasible. PRODUCER PREMIUMS FOR WATER QUALITY TRADING Although most of the discussed wedges for a WQT program are focusing on the tangible factors, there are some intangible elements that impede the success of these programs. Lack of social trust between the involved parties in a WQT program and unfamiliarity on the part of participants with program details are examples of intangible wedges that can reduce the rate of participation. In this study, I measured farmers' intangible costs for participation. I dubbed intangible costs as an innovation premium. A survey was done in person in the Jordan Lake watershed. The amount of farmers' willingness to accept for participating in WQT program was elicited and computed. The results of the survey showed that farmers are willing to participate in a WQT program, but they require a very high innovation premium that is much higher than their best management practice installation costs. IMPACT OF RELATIVE EDMAND FOR ECOSYSTEM SERVICES ON STACKING ECOSYSTEM CREDITS Consideration of the potential markets for ecosystem services raises intriguing questions about how such markets can and should interact with each other and what the implications of multiple markets are for cost and conservation objectives. Selling ecosystem service credits, along with other types of credits has been called credit stacking. I investigated the role of the demand for multiple types of credits with different attributes on ecosystem services stacking. I designed a credit staking market for total nitrogen (TN) and total phosphorus (TP) credit in a stacking framework for Jordan Lake, NC. The results showed that slope and intercept of TN and TP demand are playing profound roles in the success of a credit stacking program. In addition, if the credit stacking market is not coordinated, double-dipping can undermine its benefits. Double dipping is a situation when credit suppliers are getting paid more than they would without stacking, while they do not provide any additional credits.

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Subject

economics aspect
ecosystem services
Jordan Lake
NC
water quality trading

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