Deck 15: Improving Water Quality: Controlling Point and Nonpoint Sources

Question 1

According to the text application, mercury contamination is relatively easy to control because mercury emissions tend to remain close to the polluting source.

Answer 1

False

Question 2

Funding through the Clean Water State Revolving Fund (CWSRF) program was supplemented by funds allocated through the American Recovery and Reinvestment Act of 2009.

Answer 2

True

Question 3

The effluent limitations are set to maximize net benefits.

Answer 3

False

Question 4

The Clean Water State Revolving Fund (CWSRF) program replaced the federal grant program and established state loans to support POTW construction and other projects.

Question 5

Ultimately, federal subsidies of POTW construction accomplished little in terms of improving waste treatment for the U.S. population.

Question 6

According to available data, most water bodies in the United States have met the zero discharge goal.

Question 7

Funding for publicly owned treatment works (POTWs) was originally in the form of loans and later moved to a federal grant program.

Question 8

The technology-based effluent limitations are actually performance-based standards.

Question 9

The federal grant program may have created an incentive for over-building of POTWs and a disincentive for cost-minimization.

Question 10

Empirical research indicates that federal grants added dollar-for-dollar to POTW construction that would not otherwise have been completed at the local level.

Question 11

All point sources are subject to effluent limitations, which are imposed uniformly within each designated group.

Question 12

An advantage of the effluent limitations is that they are aligned with the national water quality objectives.

Question 13

If the effluent limitations are insufficient for a water body, that water body is considered to be "water quality limited," requiring more stringent controls called total maximum daily loads (TMDLs).

Question 14

In the United States, the greatest proportion of resources and funding has been allocated to nonpoint source pollution.

Question 15

The Nonpoint Source Management Program was enacted under the Water Quality Act of 1987 as a three-stage plan to be implemented at the state level.

Question 16

In order for the effluent limitations to achieve cost-effectiveness, the MACs of all polluters would have to be equal.

Question 17

From an economic perspective, the zero discharge goal meets the efficiency criterion by accounting for both the benefits and costs of that objective.

Question 18

Because the effluent limitations are set uniformly, achieving a cost-effective solution is unlikely.

Question 19

The National Pollutant Discharge Elimination System (NPDES) is a permitting system solely for publicly owned treatment works (POTWs).

Question 20

Delegating control of nonpoint source pollution to the states can be advantageous because runoff is affected by factors that vary considerably, making uniform controls at the federal level ineffective and difficult to implement.

Question 21

Under U.S. law, the technology-based effluent limitations are

A) not aligned with the nation's water quality objectives
B) used to control discharges from point sources through permits
C) applied uniformly within any designated group
D) all of the above

Question 22

In the United States, tradeable effluent markets are far less common than they are in other countries.

Question 23

When polluting sources with different Marginal Abatement Costs (MACs) are faced with a Marginal Effluent Fee (MEF), each abates at a different level, which means that the effluent fee does not achieve a cost-effective solution.

Question 24

The presidential Executive Order that is dedicated to the restoration of the Chesapeake Bay proposes a strictly command-and-control approach to restore and protect this natural resource.

Question 25

Polluting sources have an incentive to abate up to the point where their Marginal Abatement Cost (MAC) equals the Marginal Effluent Fee (MEF), and to pay the fee beyond that point.

Question 26

The federal grant program for POTW construction

A) displaced the Clean Water State Revolving Fund (CWSRF) Program
B) assured that the larger proportion of spending on POTW construction was at the local level
C) lowered the federal cost share in 1985 to reduce inherent inefficiencies
D) encouraged cost-effective decision making at the municipal level

Question 27

A watershed refers to a hydrologically defined land area that drains into a specific water body.

Question 28

An effluent fee

A) is a dollar value added to the price of a pollution-generating product
B) is a command-and-control instrument
C) can be based upon the degree of harm linked to the contaminant being released
D) cannot be linked to the quantity of pollution released

Question 29

Tradeable effluent permit markets can lead to cost savings as long as polluting sources face different marginal abatement costs to control the same pollutant.

Question 30

The technology-based effluent limitations

A) are performance-based standards
B) do not make distinctions based on the age of the industrial facility
C) are applicable only to nonpoint polluting sources
D) have been eliminated from U.S. water quality policy

Question 31

The use of watershed-based NPDES permits allows for permitting multiple point sources within a single watershed.

Question 32

The setting of effluent limitations

A) is based primarily on technological capability
B) follows benefit-cost analysis
C) achieves an efficient solution
D) all of the above

Question 33

Giving states control of nonpoint source pollution

A) has no advantages
B) can be problematic because states generally have inadequate data to assess the problem
C) is advantageous because it results in greater consistency of control
D) was not the original intent of the 1987 legislation

Question 34

The Clean Water State Revolving Fund (CWSRF) Program

A) was replaced by the federal grant program
B) sets up lending programs at the state level to support POTW construction
C) is no longer active
D) received no support from the American Recovery and Reinvestment Act of 2009

Question 35

If the effluent limitations are insufficient for a body of water

A) that body of water is considered "water quality limited"
B) more stringent controls are required
C) that water body becomes subject to total maximum daily loads (TMDLs)
D) all of the above
E) (a) and (b) only

Question 36

If water quality law prevents the achievement of the efficiency criterion

A) that law must be repealed
B) a "second-best" economic solution is to identify cost-effective policy initiatives
C) cost-effectiveness is also prevented
D) polluting sources should abate up to the point where total social benefits are maximized

Question 37

All of the following statements about the Nonpoint Source Management Program are correct EXCEPT

A) It was enacted as part of the Water Quality Act of 1987.
B) It is to be implemented by states with federal approval.
C) The federal government offers no funding for the program.
D) States are to implement a 3-part plan comprising reporting, program development, and program implementation.

Question 38

A fertilizer tax is an example of an effluent fee.

Question 39

According to the textbook application, efforts to restore the Chesapeake Bay have been markedly successful.

Question 40

A volume-based effluent fee is based on the degree of harm linked to the contaminant released.

Question 41

In a tradeable effluent permit market,

A) effluent allowances may be used, but not effluent credits
B) high-cost abaters will buy permits as long as the price is lower than their MAC
C) a permit price should be established where all polluters' MACs are equal
D) all of the above
E) (b) and (c) only

Question 42

When an effluent fee is put in place,

A) all polluting sources will abate the same number of units, regardless of cost differences
B) cost savings can be realized
C) an efficient solution is assured
D) each polluting source reduces effluents to zero to avoid the fee

Question 43

Suppose that the costs and benefits of achieving water quality in New York are modeled as shown below. Use these relationships for any or all of questions .
MSB = 80 - 2A MSC = 20 + 2A
TSB = 80A - A² TSC = 20A + A²,
where A is the abatement level for conventional pollutants.

-In this case, the abatement level associated with benefit-based standards would be:

A) 40
B) 15
C) 10
D) none of the above

Question 44

Among the identified point sources contributing to the pollution of Puget Sound are Dow Chemical (D) and Chevron (C). Each firm's cost functions are shown below.
MAC_D = 2.5A_D MAC_C = 3.75A_C
TAC_D = 1.25A_D² TAC_C = 1.875A_C²
To meet the effluent limits under the Clean Water Act, each firm has an NPDES permit to release some fixed amount of effluents, so each must abate 30 units.
a. At the uniform abatement standard described above, find total abatement costs for both firms.
b. Instead of a uniform standard, suppose each firm faces a volume-based, marginal effluent fee (MEF) of $90. How much will each firm abate?
c.. If each firm's production is associated with the release of 50 units of effluent, how much will each pay in total effluent fees when facing the $90 marginal effluent fee?

Question 45

When faced with a marginal effluent fee (MEF), each polluting source will

A) abate up to the point where its total abatement cost (TAC) equals the MEF
B) abate nothing and pay the MEF on all units of pollution released
C) clean up pollution as long as its marginal abatement cost is lower than the MEF
D) reduce its effluents to zero to avoid paying the effluent fee

Question 46

Suppose two point sources are discharging phosphorus into Wisconsin's Fox River and face the following abatement costs for this pollutant:
Point Source 1: TAC₁ = 500 + 0.35(A₁)²
MAC₁ = 0.7A₁
Point Source 2: TAC₂ = 750 + 1.05(A₂)²
MAC₂ = 2.1A₂,
where A₁ and A₂ represent the abatement of phosphorus effluents in pounds by Source 1 and Source 2, respectively, and TAC and MAC are measured in hundreds of dollars.
Assume that the state environmental authority has set the total maximum daily load (TMDL) for the Fox River. To achieve this limit, 40 pounds of phosphorus must be abated across the two point sources. Use this information to answer the following questions.
a. If a uniform abatement standard is used by the regulatory authority, what would be the dollar values of TAC and MAC for each source?
b. Based on your answer to part (a), is there an economic incentive for the sources to participate in the trading program? Explain briefly.
c. Quantify the cost savings associated with a cost-effective abatement allocation achieved through trading.
d. What should be the price level of the tradable permits to achieve the cost-effective solution?

Question 47

Tradeable effluent markets

A) exist only in the United States
B) are being used only for point to point trades
C) are in use in the United States, Canada, and Australia
D) have resulted in consistently high rates of trading activity

Question 48

The watershed approach

A) is a framework used to coordinate the management of each hydrologically defined area
B) has been rejected by U.S. policy makers
C) has received no financial support from the federal level of government
D) does not allow for the use of water quality trading

Question 49

Suppose that the costs and benefits of achieving water quality in New York are modeled as shown below. Use these relationships for any or all of questions .
MSB = 80 - 2A MSC = 20 + 2A
TSB = 80A - A² TSC = 20A + A²,
where A is the abatement level for conventional pollutants.

-At the benefit-based standard, total social benefits (TSB)

A) equal zero
B) are maximized
C) are minimized
D) equal TSC

Question 50

Suppose that the costs and benefits of achieving water quality in New York are modeled as shown below. Use these relationships for any or all of questions .
MSB = 80 - 2A MSC = 20 + 2A
TSB = 80A - A² TSC = 20A + A²,
where A is the abatement level for conventional pollutants.

-Compared to the efficient level of abatement, the benefit-based abatement standard

A) is twice as large in this case
B) uses fewer resources
C) is associated with higher water quality
D) is more cost-effective

Question 51

According to U.S. water quality control policy, tradeable effluent permits

A) can be used to control both point and nonpoint polluting sources
B) can achieve cost savings as long as polluters' MACs are unequal
C) are generally sold by low-cost abaters
D) all of the above
E) none of the above