Multi-pollutants allocation and compensation schemes: A new approach considering materials balance principle

The absolute cap policy has been widely used to alleviate environmental pollution. However, two practical problems must be solved to formulate effective absolute cap policies. First, there is always a conflict between efficiency and fairness. Second, the allocation scheme is often infeasible without considering the materials balance (MB) principle, especially in multi-pollutant scenarios. The MB principle comes from the physics field and requires that the mass of inputs is equal to the mass of both desired and undesired outputs. To address these two problems, this paper proposes joint allocation and compensation schemes in multi-pollutant scenarios based on the MB principle. The new approach can simultaneously satisfy efficiency and fairness principles and improve the feasibility and accuracy of allocation and compensation schemes. A case of China's thermal power industry is used to demonstrate the approach. These results indicate that the principles of efficiency and fairness can be satisfied simultaneously by the combination of the allocation scheme and compensation scheme. If the MB principle is not considered, the abatement potential and potential benefit may be overestimated, and the allocation scheme is infeasible for most provinces. Moreover, the compensation amounts may be significantly underestimated without the MB principle.