TY - UNPB

T1 - River pollution abatement

T2 - Decentralized solutions and smart contracts

AU - Gudmundsson, Jens

AU - Hougaard, Jens Leth

PY - 2021

Y1 - 2021

N2 - In river systems, costly upstream pollution abatement creates downstream welfare gains. Absentadequate agreement on how to share the gains, upstream regions lack incentives to reduce pollutionlevels. We develop a model that makes explicit the impact of water quality on productionbenefits and suggest a solution for sharing the gains of optimal pollution abatement, namely theShapley value of an underlying convex cooperative game. We provide a decentralized implementationthrough a smart contract to automate negotiations. It ensures a socially optimal agreementsupported by fair compensations to regions that turn to cleaner production from those that pollute.

AB - In river systems, costly upstream pollution abatement creates downstream welfare gains. Absentadequate agreement on how to share the gains, upstream regions lack incentives to reduce pollutionlevels. We develop a model that makes explicit the impact of water quality on productionbenefits and suggest a solution for sharing the gains of optimal pollution abatement, namely theShapley value of an underlying convex cooperative game. We provide a decentralized implementationthrough a smart contract to automate negotiations. It ensures a socially optimal agreementsupported by fair compensations to regions that turn to cleaner production from those that pollute.

M3 - Working paper

T3 - IFRO Working Paper

BT - River pollution abatement

PB - Department of Food and Resource Economics, University of Copenhagen

ER -