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Economic Research Institute Study paper






Utah State University

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Residuals generated by the society through its production and consumption activities are discharged to the water, air and land resulting in the degradation of the ambient environmental quality. The economics of this problem is recognized to stem from the divergence between private and social costs leading to overproduction and consumption and hence resource misallocation in the economy. Most traditional analysis of environmental problems have been confined to resolving externalities involving a single residual. Two deficiencies must be recognized at the outset in such an approach. First, the degree of 'third pary' effect depends on the characteristic of the residual which can generally be described by an n-component vector of concentration of different constituents and therefore, each constituents present in the residual needs to be given attention. Secondly, any treatment of residuals generate other different forms of residuals. In other words, there exists a trade-off between residuals that can be described in terms of a transformation function. Therefore policies aimed at mitigating external effects will have to necessarily take into account the residual modification processes. This study attempts to present an approach incorporating these concepts to determine suitable management schemes for the growing regional economy of the eastern part of Utah.