Design of New Institutions for Environmental and Resource Management, With Application to Pollution Control: Think Globally, Act Locally

Abstract

"Considering the nature of conflicts over resource and environmental problems, a new approach is needed. Finding the common ground and collaboration hold promise as conflict resolution paradigms in such situations. Economists can help design institutions that would foster these paradigms. For pollution control, the common ground paradigm suggests that polluters and sufferers together determine pollution emission, pollution reduction, and finance of pollution reduction. For pollution management, this paper proposes a new policy instrument involving taxes, subsidies, and cost sharing. Using this instrument, a coordination process involving polluters' and sufferers' determines a consensus about emissions and pollution reduction. Incentives for cooperation are provided by a noncooperative threat point."