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Transboundary Externalities and Property Rights: An International River Pollution Model

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Author Info

  • Gerard van der Laan

    (VU University Amsterdam)

  • Nigel Moes

    (VU University Amsterdam)

Abstract

In this paper we study international river pollution problems. We introduce a model in which the agents (countries) located along a river derive benefit while causing pollution, but also incur environmental costs of experiencing pollution from all upstream agents. We find that total pollution in the model decreases when the agents decide to cooperate. The resulting gain in social welfare can be distributed among the agents based on the property rights over the river. Using principles from international water law we suggest 'fair' ways of distributing the property rights and therefore the cooperative gain.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 12-006/1.

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Date of creation: 19 Jan 2012
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Handle: RePEc:dgr:uvatin:20120006

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Web page: http://www.tinbergen.nl

Related research

Keywords: international river; pollution; externality; property rights; value;

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References

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  1. Hilary Sigman, 2001. "International Spillovers and Water Quality in Rivers: Do Countries Free Ride?," NBER Working Papers 8585, National Bureau of Economic Research, Inc.
  2. P. Jean-Jacques Herings & Gerard van der Laan & Dolf Talman, 2004. "The Socially Stable Core in Structured Transferable Utility Games," Tinbergen Institute Discussion Papers 04-043/1, Tinbergen Institute.
  3. Hilary Sigman, 2004. "Transboundary Spillovers and Decentralization of Environmental Policies," Departmental Working Papers 200416, Rutgers University, Department of Economics.
  4. Wang, Yuntong, 2011. "Trading water along a river," Mathematical Social Sciences, Elsevier, vol. 61(2), pages 124-130, March.
  5. van den Brink, René & van der Laan, Gerard & Moes, Nigel, 2012. "Fair agreements for sharing international rivers with multiple springs and externalities," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 388-403.
  6. Rene van den Brink & Arantza Estevez-Fernandez & Gerard van der Laan & Nigel Moes, 2011. "Independence Axioms for Water Allocation," Tinbergen Institute Discussion Papers 11-128/1, Tinbergen Institute.
  7. Parrachino, Irene & Dinar, Ariel & Patrone, Fioravante, 2006. "Cooperative game theory and its application to natural, environmental, and water resource issues : 3. application to water resources," Policy Research Working Paper Series 4074, The World Bank.
  8. Gabrielle Demange, 2004. "On group stability in hierarchies and networks," Post-Print halshs-00581662, HAL.
  9. Kilgour, D. Marc & Dinar, Ariel, 1995. "Are stable agreements for sharing international river waters now possible?," Policy Research Working Paper Series 1474, The World Bank.
  10. Gray, Wayne B. & Shadbegian, R.J.Ronald J., 2004. "'Optimal' pollution abatement--whose benefits matter, and how much?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 510-534, May.
  11. Maler, Karl-Goran, 1990. "International Environmental Problems," Oxford Review of Economic Policy, Oxford University Press, vol. 6(1), pages 80-108, Spring.
  12. HERINGS, P. Jean-Jacques & van der LAAN, Gerard & TALMAN, Dolf, . "The average tree solution for cycle-free graph games," CORE Discussion Papers RP -2155, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Erik Ansink & Hans-Peter Weikard, 2009. "Sequential Sharing Rules for River Sharing Problems," Working Papers 2009.114, Fondazione Eni Enrico Mattei.
  14. René Brink & Gerard Laan & Valeri Vasil’ev, 2007. "Component efficient solutions in line-graph games with applications," Economic Theory, Springer, vol. 33(2), pages 349-364, November.
  15. Fernandez, Linda, 2002. "Solving water pollution problems along the US Mexico border," Environment and Development Economics, Cambridge University Press, vol. 7(04), pages 715-732, October.
  16. Fernandez, Linda, 2009. "Wastewater pollution abatement across an international border," Environment and Development Economics, Cambridge University Press, vol. 14(01), pages 67-88, February.
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Cited by:
  1. Jorge Alcalde-Unzu & María Gómez-Rúa & Elena Molis, 2013. "Sharing the costs of cleaning a river: the Upstream Responsibility rule," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 1301, Departamento de Economía - Universidad Pública de Navarra.

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