A state-contingent production approach to principal-agent problems with an application to point-source pollution control

Two basic representations of principal-agent relationships, the 'state-space' and 'parameterized distribution' formulations, have emerged. Although the state-space formulation appears more natural, analytical studies using this formulation have had limited success. This paper develops a state-space formulation of the moral-hazard problem using a general representation of production under uncertainty. A closed-form solution for the agency-cost problem is derived. Comparative-static results are deduced. Next we solve the principal's problem of selecting the optimal output given the agency-cost function. The analysis is applied to the problem of point-source pollution control. (C) 1998 Published by Elsevier Science S.A. All rights reserved.

Economic and environmental impacts of pollution control in a system of environment and economic interdependence

The importance of the rate of change of the pollution stock in determining the damage to the environment has been an issue of increasing concern in the literature. This paper uses a three-sector (economy, population and environment), non-linear, discrete time, calibrated model to examine pollution control. The model explicitly links economic growth to the health of the environment. The stock of natural resources is affected by the rate of pollution flows, through their impact on the regenerative capacity of the natural resource stock. This can shed useful insights into pollution control strategies, particularly in developing countries where environmental resources are crucial for production in many sectors of the economy. Simulation exercises suggested that, under plausible assumptions, it is possible to reverse undesirable transient dynamics through pollution control expenditure, but this is dependent upon the strategies used for control. The best strategy is to spend money fostering the development of production technologies that reduce pollution rather than spending money dealing with the effects of the pollution flow into the environment. (C) 2001 Elsevier Science Ltd. All rights reserved.

Impact of point source pollution on nitrogen isotope signatures (delta N-15) of vegetation in SE Brazil

This study presents novel evidence that N-15 natural abundance can be used as a robust indicator to detect pollutant nitrogen in natural plant communities. Vegetation from the heavily polluted industrial area of Cubatao in Sao Paulo State, SE Brazil, was strongly N-15 depleted compared to plants at remote sites. Historic herbarium samples from Cubatao were significantly less N-15 depleted than extant plants, indicating that N-15 depletion of vegetation is associated with present-day nitrogen pollution in Cubatao. The heavy load of nitrogenous atmospheric pollutants in Cubatao provides a nitrogen source for plants, and strongly N-15 depleted air NH3 is likely to contribute to plant and soil N-15 depletion. Epiphytic plants from Cubatao were extremely N-15 depleted (average -10.9parts per thousand) contrasting with epiphytes at remote sites (averages -1.0parts per thousand and -3.0parts per thousand). Nitrogen isotope composition of vegetation provides a tool to determine input of pollutant nitrogen into plant communities. The strong isotopic change of epiphytes suggests that epiphytes are particularly sensitive biomonitors for atmospheric pollutant nitrogen.

Exposure to automotive pollution increases plasma susceptibility to oxidation

Low-density lipoprotein oxidation is implicated in the development of atherosclerosis. Plasma susceptibility to oxidation may be used as a marker of low-density lipoprotein oxidation and thus predict atherosclerotic risk. In this study the authors investigated the relationship between plasma susceptibility to oxidation and exposure to automotive pollution in a group of automobile mechanics (n = 16) exposed to high levels of automotive pollution, vs. matched controls (n = 13). The authors induced plasma oxidation by a free radical initiator and they determined susceptibility to oxidation by (1) change in absorbance at 234 nm, (2) lag time to conjugated diene formation, and (3) linear slope of the oxidation curve. Mechanics had significantly higher values (mean standard error) for change in absorbance (1.60 +/- 0.05 vs. 1.36 +/- 0.05; p < .002), and slope (1.6 x 10(-3) +/- 0.1 x 10(-3) vs. 1.3 x 10(-3) +/- 0.1 x 10(-3); p < .001), compared with controls. These results indicate that regular exposure to automotive pollutants increases plasma susceptibility to oxidation and may, in the long term, increase the risk of developing atherosclerosis.