The ability of a market type mechanism to significantly reduce the compliance costs of current state and national erosion standards is investigated. The ability of such an institution when applied to a recursively produced pollutant such as sediment from agricultural land is, however, extremely sensitive to the order in which contracts are executed. The gain-ranked order of contracting is found to result in a larger reduction in costs than the mean cost reduction calculated under a random order of contracting. The degree to which actual contracting more closely corresponds to the random or gain-ranked order is, therefore, of crucial importance given the desirability of achieving a sediment load at the least cost possible.

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