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metrics can describe not only total welfare but also the welfare of participating
groups identifying who gains and who loses. One should be prepared for different effects across producers and consumers when a practice alters prices of
commodities.
• One can provide Nexus action adoption incentives by introducing markets, subsidies, performance standards, or taxes to stimulate adoption by those who lose
in the interest of gains to others. Incentives are needed to attain full cooperation
especially to those who otherwise lose from strategy implementation.
• Nexus actions can cause negative impacts or externalities on other parties that
need to be considered. Social justice is a concern when Nexus actions negatively
affect disadvantaged populations.
• The Nexus arena is continually evolving given the influences of things like a
growing population and climate change, so we need to consider how to properly
balance current versus future resource allocation to maximize social welfare.
The discount rate is a key concept here.
• Risk sharing mechanisms may be needed as Nexus adoption may alter risk and
influence stakeholder decisions to adopt.
• Some Nexus actions will not be adopted by private individuals as they benefit the
public, not just the individual. In such cases, the public may need to get directly
involved in adoption.
Discussion Points and Exercises
1. Discuss why the rebound effect might occur if you are subsidizing lower cost
lawn irrigation practices in a growing municipality.
2. Discuss why not all nexus alternatives can be observed in usage in a setting.
Discuss the role of historical commodity and water prices along with induced
innovation.
3. Discuss why incentives may be needed to implement FEW Nexus actions by
listing two to three examples.
4. Discuss the consequences of changing to more water efficient cooling practices for power generators in a scarce water setting where the change makes
more water available for municipal use and reduces water purchases from
agriculture. Could power generators lose? What might happen to agricultural
producers? What would be the consequence of having this lower priced
water for municipalities? Would some form of compensation possibly be
needed and if so how could it be implemented as a way of resolving negative
effects?
5. Discuss how reducing discount rates will affect the desirability of investments
with significant upfront costs and benefits occurring later.
6. Suppose you are doing a study of changing cooling water alternatives and the
one being considered eliminates the need for a cooling pond that provides
spawning grounds for an endangered fish species and also reduces the discharge of pollutants into a nearby river. Would there be any need for nonmarket valuation in such a setting? Could benefits transfer be used and if so
what qualifications might you state on the resultant estimates?
B. A. McCarl and Y. Yang
metrics can describe not only total welfare but also the welfare of participating
groups identifying who gains and who loses. One should be prepared for different effects across producers and consumers when a practice alters prices of
commodities.
• One can provide Nexus action adoption incentives by introducing markets, subsidies, performance standards, or taxes to stimulate adoption by those who lose
in the interest of gains to others. Incentives are needed to attain full cooperation
especially to those who otherwise lose from strategy implementation.
• Nexus actions can cause negative impacts or externalities on other parties that
need to be considered. Social justice is a concern when Nexus actions negatively
affect disadvantaged populations.
• The Nexus arena is continually evolving given the influences of things like a
growing population and climate change, so we need to consider how to properly
balance current versus future resource allocation to maximize social welfare.
The discount rate is a key concept here.
• Risk sharing mechanisms may be needed as Nexus adoption may alter risk and
influence stakeholder decisions to adopt.
• Some Nexus actions will not be adopted by private individuals as they benefit the
public, not just the individual. In such cases, the public may need to get directly
involved in adoption.
Discussion Points and Exercises
1. Discuss why the rebound effect might occur if you are subsidizing lower cost
lawn irrigation practices in a growing municipality.
2. Discuss why not all nexus alternatives can be observed in usage in a setting.
Discuss the role of historical commodity and water prices along with induced
innovation.
3. Discuss why incentives may be needed to implement FEW Nexus actions by
listing two to three examples.
4. Discuss the consequences of changing to more water efficient cooling practices for power generators in a scarce water setting where the change makes
more water available for municipal use and reduces water purchases from
agriculture. Could power generators lose? What might happen to agricultural
producers? What would be the consequence of having this lower priced
water for municipalities? Would some form of compensation possibly be
needed and if so how could it be implemented as a way of resolving negative
effects?
5. Discuss how reducing discount rates will affect the desirability of investments
with significant upfront costs and benefits occurring later.
6. Suppose you are doing a study of changing cooling water alternatives and the
one being considered eliminates the need for a cooling pond that provides
spawning grounds for an endangered fish species and also reduces the discharge of pollutants into a nearby river. Would there be any need for nonmarket valuation in such a setting? Could benefits transfer be used and if so
what qualifications might you state on the resultant estimates?
B. A. McCarl and Y. Yang