COPING WITH UNCERTAINTY IN WATER QUALITY MANAGEMENT THROUGH CHOICES OF POLICY INSTRUMENTS AND INFORMATION INVESTMENTS

Traditionally, information collection for water quality management has been focused on biological data to describe environmental conditions, and stressor-condition-response relationships. While this kind of information is essential, other types of information e.g., economic information about the benefits and costs of alternative policy actions may be equally important for efficient management.In this dissertation, I examine the performance of alternative strategies for managing ecological risks related to nutrient pollution in the Susquehanna River Basin (SRB) under alternative economic and ecological information structures. The SRB is the major source of nutrient pollution and related ecological damages in the Chesapeake Bay. The water quality management strategies are differentiated by nutrient reduction targets for subwatersheds of the SRB, and the environmental instruments used to pursue these goals. I define performance as the expected net benefits (pollution control benefits less costs) achieved by the strategies. The analysis allows me to estimate how the reduction of economic and ecological uncertainty can influence the optimal design of the strategies, and also estimate the value of different types of information in improving the performance of the strategies.The study is based on a coupled numerical economic-biophysical model. Uncertainty is modeled by randomizing the values of model parameters using Monte Carlo simulation techniques. The results show that the value of all types of information is strongly dependent on the policy instruments used in water quality management. I also find that information about the economic benefits of pollution reductions has the highest value regardless of the management strategies. The value of information and policy performance results are sensitive to the assumptions about the functional forms and initial amount of information available to water quality managers. However, the relative performance of alternative policy instruments and relative ranking of information collection strategies are independent from the assumptions.