1. a. Discuss the major difficulties associated with estimating the benefits of water pollution abatement.
b. Propose a policy approach that would promote states' use of benefit-cost analysis in setting and evaluating standards.
2. Assume that the following benefit and cost equa- tions have been estimated for the abatement of an industrial solvent:
MSB = 15 - 0.2A MSC = 7 + 0.3A
where A is the percentage of abatement, and the dollar values are in millions.
Now suppose that rulings under the Clean Water Act call for an abatement standard of 25 percent. Assess the efficiency implications of this standard.