The Diffusion of Biological Waste-Water Treatment Plants in the Dutch Food and Beverage Industry

This article develops an economic model of environmental technology adoption decisions. The model is applied econometrically to the diffusion of biological waste-water treatment plants in the Dutch food and beverage industry. It shows that it is possible to explain the overall diffusion pattern of biological waste-water treatment plants in terms of a rational choice model in which prospective adopters trade off the costs of effluent treatment against the savings on effluent tax payments. Effluent charges are shown to be a significant positive factor in the timing of adoption of biological effluent treatment plants. This result is brought out by both the rational choice and the epidemic models. None of the models however can explain year-to-year changes in the ownership of biological waste-water treatment plants during the 1974–91 period, which suggests that there are other factors, not included in the model, that affect the timing of adoption.