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Transboundary water pollution coordination decision-making model: an application in Taihu Basin in China

Author

Listed:
  • Jie Zhang

    (Hohai University)

  • Meilian Liu

    (Guilin University of Electronic Technology)

  • Qinfei Li

    (Guilin University of Electronic Technology)

Abstract

Transboundary water pollution is a persistent problem in China. The Chinese government has been tentatively experimenting with eco-compensation schemes for decades to protect and sustainably use ecosystem services. However, compensation standards and pollutant reduction are the key problems in these eco-compensation schemes. This study proposes a coordination decision-making model that incorporates a typical Stackelberg game between the administrator and individual region of a river basin to solve the problems. Based on prospect theory, the model considers the bidirectional eco-compensation mechanism, the different risk preference, and the loss aversion degree of the administrator and individual regions of a river basin to compute an optimal compensation standard. Given the compensation standard, the individual regions can decide their optimal pollution reductions. Taking the Taihu lake basin as a case, the conclusions were drawn as follows. The optimal compensation standard is 3394 yuan/ton, and the optimal regional pollutant reductions of Zhejiang, Shanghai for Jiangsu are 1854 tons and 270 tons separately. The results of the coefficient sensitivity analysis show that, according to the risk preference and loss aversion degree of individual regionals, the administrator can adjust compensation standard to promote regions to reduce pollutants and maximize the utility of eco-compensation scheme.

Suggested Citation

  • Jie Zhang & Meilian Liu & Qinfei Li, 2024. "Transboundary water pollution coordination decision-making model: an application in Taihu Basin in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(3), pages 5561-5578, March.
    • Handle: RePEc:spr:endesu:v:26:y:2024:i:3:d:10.1007_s10668-023-02962-2
    DOI: 10.1007/s10668-023-02962-2
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    Keywords

    Transboundary water pollution; Eco-compensation; Pollutant reduction; Decision-making model; Prospect theory;
    All these keywords.

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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