The traffic light system. Is it a solution to a nonpoint pollution problem?

Figures & data

Table 1. Maximum allowable biomass for firms, farm sites and production areas.

Level	Comment
Firm	Each firm owns a number of licenses with a MAB, which specify the farm site and production area where the license can be used
Farm site	The MAB at the farm site level is restricted
Production area	Since MAB licenses owned by firms specifies the production areas where they can be used, the total MAB at the production area level is also restricted

Source: Tveterås et al. (2020).

Figure 1. Salmon lice regulation in Norway.

Table 2. The traffic light system.

Traffic light	Estimated aggregated salmon lice-induced mortality of wild salmon stocks	Terminology for salmon lice-induced mortality	Action for a production area
Green	Less than 10%	Low	Increase the MAB with 6%
Yellow	Between 10% and 30%	Moderate	Keep the MAB constant
Red	Above 30%	High	Reduce the MAB with 6%

Source: Adjusted based on Tveterås et al. (2020).

Table 3. Overview of challenges when using aggregated pollution to regulate nonpoint pollution problems.

Reference	Problem	Suggested incentive scheme
Hansen (1998)	High information requirement	Damage cost based mechanism
Herriges et al. (1994)	Influence on aggregated pollution	None
Xepapadeas (1991); Herriges et al. (1994)	Budget balance	Random penalty mechanism
Hansen and Romstad (2007)	Optimal industry structure	Combination of a tax on aggregated pollution and a lump sum transfer based on self-reported individual pollution
Xepapadeas (1995)	Measurement problems for aggregated pollution	Combination of a tax on aggregated pollution and a Pigovian tax on individual self-reported pollution
Meran and Schwable (1987)	Collective punishment	None

Table 4. Number of firms and farm sites in each production area.

Production area	Number of firms	Number of farm sites
1	4	10
2	10	45
3	26	133
4	26	131
5	8	42
6	13	122
7	9	74
8	19	90
9	13	105
10	13	70
11	9	44
12	5	72
13	2	8

Source: Norwegian Directorate of Fisheries, Aquaculture Register, 17. October, 2022.

Tveterås, R., Misund, B., Aponte, F. R., & Pincinato, R. (2020). Regulation of salmon aquaculture towards 2030: Incentives, economic performance and sustainability.

 Google Scholar

Hansen, L. G. (1998). A damage based tax mechanism for regulation of non-point emissions. Environmental & Resource Economics, 12(1), 99–112. https://doi.org/10.1023/A:1008222900176

 Web of Science ®Google Scholar

Herriges, J. A., Govindasamy, R., & Shogren, J. F. (1994). Budget-Balancing incentive schemes. Journal of Environmental Economics & Management, 27(3), 275–285. https://doi.org/10.1006/jeem.1994.1039

 Web of Science ®Google Scholar

Xepapadeas, A. (1991). Environmental policy under imperfect information: Incentives and moral hazard. Journal of Environmental Economics & Management, 20(2), 113–126. https://doi.org/10.1016/0095-0696(91)90045-K

 Web of Science ®Google Scholar

Hansen, L. G., & Romstad, E. (2007). Non-point source regulation – a self-reporting mechanism. American Journal of Agriculture Economics, 77, 1024–1032.

 Google Scholar

Xepapadeas, A. (1995). Observability and choice of instrument mix in the control of externalities. Journal of Public Economics, 56(3), 485–498. https://doi.org/10.1016/0047-2727(94)01441-P

 Web of Science ®Google Scholar

Meran, G., & Schwable, U. (1987). Pollution control and collective penalties. Journal of Institutional & Theoretical Economics, 143, 616–624.

 Web of Science ®Google Scholar