Advertisement

Environmental and Resource Economics

, Volume 68, Issue 2, pp 227–248 | Cite as

Bargaining Over Environmental Budgets: A Political Economy Model with Application to French Water Policy

  • Alban Thomas
  • Vera Zaporozhets
Article
  • 271 Downloads

Abstract

In decentralized water management with earmarked budgets financed by user taxes and distributed back in the form of subsidies, net gains are often heterogeneous across user categories. This paper explores the role of negotiation over budget allocation and coalition formation in water boards, to provide an explanation for such user-specific gaps between tax payments and subsidies. We propose a bargaining model to represent the sequential nature of the negotiation process in water districts, in which stakeholder representatives may bargain upon a fraction of the budget only. The structural model of budget shares estimated from the data on French Water Agencies performs well as compared with reduced-form estimation. Empirical results confirm the two-stage bargaining process and provide evidence for systematic net gains from the system for agricultural water users.

Keywords

Water policy Political economy Structural estimation Bargaining 

References

  1. Banks JS, Duggan J (2000) A bargaining model of collective choice. Am Polit Sci Rev 94(1):73–88CrossRefGoogle Scholar
  2. Baron DP, Ferejohn JA (1989) Bargaining in legislatures. Am Polit Sci Rev 83:1181–1206CrossRefGoogle Scholar
  3. Carraro C, Sgobbi A (2011) A stochastic multiple players, multi-issues bargaining model for the Piave River Bassin. Strateg Behav Environ 1(2):119–150CrossRefGoogle Scholar
  4. Carraro C, Marchiori C, Sgobbi A (2005) Application to negotiation theory to water issues. World Bank Policy Research Working Paper 3641Google Scholar
  5. Carraro C, Siniscalco D (1993) International protection of the environment. J public Econ 52:309–328CrossRefGoogle Scholar
  6. CGDD (2012) Valuation of environmental goods and services: use and best practices (in French). In: Katossky A, Marcus V (eds) Commissariat for sustainable development working paper 78, Ministry of the Environment, Paris (November)Google Scholar
  7. Diermeier D, Merlo A (2004) An empirical investigation of coalitional bargaining procedures. J Public Econ 88:783–797CrossRefGoogle Scholar
  8. Eraslan H (2008) Corporate Bankruptcy reorganizations: estimates from a bargaining model. Int Econ Rev 49(2):659–681CrossRefGoogle Scholar
  9. Ferejohn J (1974) Pork Barrel politics: rivers and harbors legislation 1947–1968. Stanford University Press, StanfordGoogle Scholar
  10. Gatti R, Goeschl T, Groom B, Swanson T (2011) The biodiversity bargaining problem. Environ Resour Econ 48:609–628CrossRefGoogle Scholar
  11. Hall AR, Pelletier D (2015) Non-nested testing in models estimated via generalized method of moments. Econometric Theory 27(2):443–456CrossRefGoogle Scholar
  12. Hattori K (2010) Strategic voting for noncooperative environmental policies in open economies. Environ Resou Econ 46:459–474CrossRefGoogle Scholar
  13. Kauppi H, Widgrén M (2004) What determines EU decision making? Needs, power or both? Econ Policy 19(39):221–226CrossRefGoogle Scholar
  14. Knight B (2004) Parochial interests and the centralized provision of local public goods: evidence from congressional voting on transportation projects. J Public Econ 88:845–866CrossRefGoogle Scholar
  15. Knight B (2005) Estimating the value of proposal power. Am Econ Rev 95(5):1639–1652CrossRefGoogle Scholar
  16. Lessmann K, Kornek U, Bosetti V, Dellink R, Emmerling J, Eyckmans J, Nagashima M, Weikard H, Yang Z (2015) The stability and effectiveness of climate coalitions. A comparative analysis of multiple integrated assessment models. Environ Resour Econ. doi: 10.1007/s10640-015-9886-0
  17. Lewitt SD, Poterba JM (1999) Congressional distributive politics and state economic performance. Public Choice 99:185–216CrossRefGoogle Scholar
  18. Moro D, Sckokai P (1999) Modelling the CAP arable crop regime in Italy: degree of decoupling and impact of agenda 2000. Rev Agric Environ Stud 53:49–73Google Scholar
  19. OECD (2011) Water governance in OECD countries: a multi-level approach. OECD Studies on Water, OECD Publishing, ParisGoogle Scholar
  20. Proost S, Zaporozhets V (2013) The political economy of fixed regional public expenditure shares with an illustration for Belgian railway investments. Region Sci Urban Econ 43(5):808–815CrossRefGoogle Scholar
  21. Rivers D, Vuong Q (2002) Model selection tests for nonlinear dynamic models. Econom J 5:1–39CrossRefGoogle Scholar
  22. Seroa da Motta R, Thomas A, Hazin L Saade, Feres JG, Nauges C, Hazin Saade (2004) Economic instruments for water management. Edward Elgar, CheltenhamGoogle Scholar
  23. Simon LK, Thoyer S, Morardet S, Goodhue RE, Rio P, Rausser GC (2006) Structure and bargaining power in multilateral negotiations: applications to water management policies in France, LAMETA Working Paper n2006–09Google Scholar
  24. Smith RJ (1992) Non-nested tests for competing model sestimated by generalized method of moments. Econometrica 60(4):973–980CrossRefGoogle Scholar
  25. Thoyer S, Morardet S, Rio P, Simon L, Goodhue R, Rausser G (2001) A bargaining model to simulate negotiations between water users. J Artif Soc Soc Simul. http://jasss.soc.surrey.ac.uk/4/2/6.html
  26. Van Egteren H, Tang J (1997) Maximum Victim benefit: a fair division process in transboundary pollution problems. Environ Resour Econ 10:363–386CrossRefGoogle Scholar
  27. Wang H, Mamingi N, Laplante B, Dasgupta S (2003) Incomplete enforcement of pollution regulation: bargaining power of chinese factories. Environ Resou Econ 24:245–262CrossRefGoogle Scholar
  28. Watson N, Howe J (2006) Implementing the EU water framework directive: experiences of participatory planning in the Ribble Basin, North West England. Water Int 31(4):472–487CrossRefGoogle Scholar
  29. Weikard H, Dellink R, Van Ierland E (2010) Renegotiations in the greenhouse. Environ Resour Econ 45:573–596CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  1. 1.Toulouse School of Economics, CNRS, EHESS, INRAUniversity of ToulouseToulouse Cedex 6France

Personalised recommendations