Transboundary Externalities and Property Rights: An International River Pollution Model

Gerard van der Laan and Nigel Moes

No 12-006/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

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.

Keywords: international river; pollution; externality; property rights; value (search for similar items in EconPapers)
JEL-codes: C70 D60 Q53 (search for similar items in EconPapers)
Date: 2012-01-19
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Citations: View citations in EconPapers (8)

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