Indexed on: 01 Dec '97Published on: 01 Dec '97Published in: Environmental and Resource Economics
Due to eutrophication caused by heavy loads of nitrogen and phosphorus, the biological conditions of the Baltic Sea have been disturbed: large sea bottom areas without any biological life, low stocks of cods, and toxic blue green algaes. It is recognized that the nitrogen and phosphorus loads to the Baltic Sea must be reduced by 50% in order to restore the sea. The main purpose of this paper is to calculate cost effective nitrogen and phosphorus reductions to the Baltic Sea from the nine countries surrounding the Baltic Sea. The results show a significant difference in minimum costs of decreasing nitrogen and phosphorus loads to the Sea: approximately 12 000 millions of SEK per year and 3 000 millions of SEK respectively for reductions by 50%. It is also shown that a change from a policy of cost-effective nutrient reductions to a policy where each country reduces the nutrient loads by 50% increase total costs for both nitrogen and phosphorus reductions by about 300%. The results are, however, sensitive to several of the underlying assumptions and should therefore be interpreted with much caution.