Year of Publication

2015

Degree Name

Master of Science (MS)

Document Type

Master's Thesis

College

Agriculture, Food and Environment

Department

Agricultural Economics

First Advisor

Dr. Wuyang Hu

Abstract

As part of the EPA’s initiative to reduce the hypoxic zone in the Gulf of Mexico, a feasibility study for a potential water quality trading (WQT) program in the Kentucky River Watershed (KRW) was conducted. While theoretically, emission trading programs are among the most efficient means of reducing pollution, empirical evidence suggests low-trade volume as a primary concern for the long-term success of such programs. Some of the important reasons for the low volume of trade are due to lack of suitable market trading mechanism for point sources and lack of information on willingness to pay (WTP) for abatement credits. Our study aims to tackle these issues by gathering a profile of municipal sewage treatment plants as point source polluters in the KRW, while simultaneously analyzing their preferences for WQT market mechanisms and WTP using a survey based approach. The survey was conducted in 2012. Municipal sewage treatment plants’ ranked preferences are analyzed using an exploded logit model and WTP is analyzed using Ordinary Least Squares and Tobit models.

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