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The management of nonpoint source water pollution presents an immense challenge toeconomists and policy makers alike. A complex array of physical, economic, political andinstitutional barriers lie between theoretically appealing textbook prescriptions and theirtransition into successful real-world solutions. Underlying beliefs about property rights, interestgroup politics and the transaction costs associated with designing and implementing successfulmeasures have all played a particularly critical role. Building on the theoretical literature and thelessons provided by the practical use of economic instruments for nonpoint source waterpollution management around the world, this paper considers these issues in the context of theSwan-Canning river system in Perth. Four innovative economic instruments for the managementof nonpoint source nutrient pollution in that system are discussed: auctioned best managementpractice payments; best management practice incentive charges; an urban nonpoint sourceemissions offset bank; and a catchment based licensing/trading program.
