Reducing the cost of water-pollution control under the Clean Water Act

The present water-pollution-regulation system focuses on treatment by the individual and ignores the aggregate cost of pollution control. Economists have proposed three methods to create pollution-control systems that cost less than the present one: effluent charges, marketable effluent permits, and private ownership of the waterway. Of these methods, only the marketable permit system has any potential for use within the Clean Water Act. Under the Act the Environmental Protection Agency (EPA) could not implement an initial sale of such permits, but a state administering its own permit system could. Either agency could allow transfer of permits after issuance if upon each transfer they required the procedural safeguards required by the Act. Requiring the safeguards would, however, diminish the system's ability to lower pollution-control costs. Whether an agency could allow transfer without the safeguards is unclear, but an EPA regulation allowing transfers under just one of the safeguards probably could not withstand a court challenge. 104 references.