An input tax on nitrogen fertiliser pollution in the presence of transaction costs

Yaron Fishman, Nir Becker, Mordechai Shechter

Research output: Contribution to journalArticlepeer-review


This paper proposes, for different water scarcity conditions, a cost efficient input tax policy to supply clean drinking water that is subject to contamination by nitrogen fertiliser and to quantify the welfare change due to this public control. By introducing a transaction cost component, we found that for moderate and relatively high water scarcity conditions the results support public intervention. However, for low scarcity conditions, our results indicate that welfare change is low or even negative, discouraging public intervention. We discuss a policy that supports the legal principle of the Polluter Pays Principle (PPP), by compensating the victim for the residual pollution not abated by the cost efficient solution, without affecting the efficiency criterion.

Original languageEnglish
Pages (from-to)1206-1227
Number of pages22
JournalJournal of Environmental Planning and Management
Issue number9
StatePublished - Nov 2012


  • economic incentives
  • groundwater contamination
  • nitrate
  • polluter pays principle
  • pollution control
  • transaction costs
  • welfare change

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Water Science and Technology
  • General Environmental Science
  • Fluid Flow and Transfer Processes
  • Management, Monitoring, Policy and Law


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