Regional cooperation and management of port pollution

This paper investigates the market-based policy on pollution control in a region with multiple ports. Although the fraction of in-port pollution is modest compared to at-sea emission, port pollutions generally occur near populated areas and have a higher impact on public health. Most of the studies on maritime pollution control have focused on technical designs and operating issues over deep sea shipping. In addition, while pollution from a port's operation may spread out and has influence over a wider region, few studies have analyzed emission control across ports. This paper aims to complement this stream of research by examining the behaviors of ports and port users (i.e., shippers and shipping lines) if a certain incentive or disincentive policy is implemented. Our investigation reveals that in the absence of inter-port coordination, pollution spill-over and inter-port competition can lead to distorted pollution taxation and emission constraints. As a result, there will be excessive pollution and sub-optimal social welfare. Therefore, despite the potential competition among the ports in a region, it is important for them to coordinate their pollution control efforts. Our study recommends a regional approach in pollution control, and suggests areas where inter-port cooperation is needed among the competing ports.