An Economics Analysis of Using Transferable Permit System to Control Water Pollution: Hog Farming at the Dung-Kang River Watershed

To better control for the surface water pollution problem, the EPA was considering a new practice that asked for the polluting firms which are located at the same watershed to meet the limit of total emissions level. However, the current practice asks for the firms to apply for emissions permit beforehand while it lacks for the feasibility of transferring from one producer to the other.

How to modify the current system to make it more efficient to allocate the total amount of emissions could be greatest challenge. From theoretical point of view and from experiences from other countries, the use of marketable or transferable permit system seems to be a good alternative. The system would allow for the existing firms to sell their permits openly on the market.