A lexicographic quota model for allocating initial discharge permits for industrial source points in a lake basin: A case study for Lake Tai in Jiangsu, China

This paper investigates how to allocate quota permits for initial discharge from industrial point sources in a lake basin. The model takes fairness, efficiency and feasibility as basic principles. By introducing a weighted lexicographic minimization of the maximum initial discharge permit shortage rate for different industrial point sources, this paper proposes a quota allocation model and furnishes a solution procedure for determining initial discharge permits for multiple pollutants involving a finite number of initial discharge permits. A case study is developed to examine a single-period allocation problem of initial ammonia nitrogen (NH3-N) discharge permits among 27 key industries in Lake Tai in Jiangsu, China A comparative study is conducted to assess the impact on industrial pollution control by different solutions based on the proposed approach and two other models. Analytical results demonstrate that the proposed lexicographic quota model achieves the lowest average shortage rate of 46.13% across industries, helps to enhance efficient implementation of the allocation scheme among multiple stakeholders and feasibility of adjusting industrial planning for the lake basin. In addition, the proposed model maximizes the average industrial pollution control benefits. Empirical analyses also indicate that appropriate changes in model weights can effectively affect initial discharge permit shortage rates and industrial pollution control results, thereby attaining the goal of fair, efficient, and feasible allocation.