(200k) An MILP Model for Watershed Pollution Trading Which Incorporates Material Flow Analysis

Important efforts have been made recently to improve environmental quality and diverse environmental management policies have been implemented. Some of these strategies use economic incentives for compliance, such as pollution trading. This paper proposes a mathematical programming model for the pollution trading among different pollution sources; the model is limited to watershed trading but, as a novel contribution, it considers the sustainability of the surrounding watershed. The formulation involves the minimization of the costs associated to the implementation of the required technology to satisfy the environmental constraints in order to achieve optimal water quality conditions. The model uses a material flow analysis technique to represent changes on the behavior of the watershed due to the polluted discharges. The material flow analysis considers all discharges and extractions (i.e., industrial and residential discharges, pluvial precipitation, evaporation, etc.) as well as the chemical and biochemical reactions taking place in the watershed. In the context of pollution trading, the implementation of the proposed formulation determines whether industrial sources must buy credits to compensate the violation of environmental constraints or if they require the installation of treatment technologies to sell credits to another sources. The formulation was applied to a case study involving the drainage system of the Bahr El-Baqar region in Egypt; the results show the advantages of the proposed approach in terms of cost and sustainability.