ABSTRACT
Nonpoint source water pollution controls may be necessary if the objectives of federal water pollution control legislation are to be met. Control of nonpoint sources is more likely to be cost effective if imposed in a decentralized manner. One option for expanding the regulatory scope to include nonpoint sources is to allow trading of discharge reductions between point and nonpoint sources. A body of research and experience suggests a capability for this policy alternative to lower control costs, but we know less about important issues such as monitoring costs, market power, distributive effects, incentives for innovation, and nonconservative pollutants.
