An ambient tax approach to invasive species

Invasive species have become an issue of increasing concern in recent years. Invasive species are species that are not native to an area but are imported either intentionally or unintentionally and become established. A primary pathway for introduction is the ballast water of ships. Although not all imported species become invasive, those that do cause extensive damage to ecosystems and have been blamed for the endangerment of numerous native species. In many cases, release of non-native species can be prevented, either through open-ocean ballast water exchange, retention of ballast water, or other biosecurity measures. However, policies designed to encourage such actions face several specific challenges. The difficulty of linking an invasion to a specific vessel and of monitoring individual vessels' care makes using standard environmental liability plans difficult if not impossible. In this paper, we present an alternative policy option, that of an ambient tax. Building on the work of Segerson [Segerson, Kathleen, 1988. Uncertainty and incentives for nonpoint pollution control. Journal of Environmental Economics and Management, 15: 87-98.], we show that an ambient tax can ensure socially optimal behavior in both the short-run and the long-run with minimal vessel specific information.