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A Planning Model for a Water Quality Management Agency

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The Canada Water Act provides for the establishment of regional management agencies in areas designated as water quality management areas. These agencies must establish water quality standards within their area and design a control program to meet these standards efficiently. This paper describes a model for planning an efficient water quality program within a river basin. The waste abatement control employed is called the rent allotment control, whose merit is that its implementation provides a solution to the information problem of efficient waste abatement. The control is implemented through a bargaining process or game between the agency and the waste dischargers that may be characterized as an n-person prisoner's dilemma. The game provides the agency with information about individual waste abatement costs, and terminates in a set of agreements on rents and allotments which depend upon the bidding strategies adopted by each player. "Optimal" bidding strategies are examined under the assumption that waste dischargers are risk averse and cost minimizing. An example of the operation of the control is provided using data from the Ottawa River Basin.

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