Recycled Effluent: Should the Polluter Pay?

Eli Feinerman, Yakir Plessner and Dafna M. DiSegni Eshel

American Journal of Agricultural Economics, 2001, vol. 83, issue 4, 958-971

Abstract: A coastal city can either dispose of recycled effluent by dumping it in the sea, or transfer it to farmers in its hinterland for irrigation. Who should bear the cost of recycling? Three alternatives are employed: a central planner who maximizes the combined utility of city and farmers; regulation by prices, for which purpose we develop the city's supply function;and a bargaining framework for the allocation of costs. The main conclusions are that “the polluter pays” rule cannot be justified in principle and that bargaining may result in inefficiency. We demonstrate with an example from Israel that essentially conforms to the theoretical structure. Copyright 2001, Oxford University Press.

Date: 2001
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