Abstract
Transboundary air pollution is analysed as a dynamic game between Finland and the nearby areas of the Soviet Union. Sulphur emissions are used as the environmental control variables and the acidities of the soils as the state variables. Acidification is consequently considered to be a stock pollutant having long-lasting harmful effects on the environment. The state dynamics consist of two relationships: first, of a sulphur transportation model between the regions and, second, of a model describing how the quality of the soil is affected by sulphur deposition. The countries are assumed to be interested in maximizing the net benefits from pollution control as measured by the impacts on the values of forest growth net of the abatement costs. Cooperative and noncooperative solutions of the game are compared to assess the benefits of bilateral cooperation. Using empirical estimates of abatement costs, acidification dynamics and impacts on forest growth it is shown that cooperation is beneficial to Finland but not to the Soviet Union. Consequently, Finland has to offer monetary compensation to induce her neighbor to invest in environmental protection.
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Kaitala, V., Pohjola, M. & Tahvonen, O. Transboundary air pollution and soil acidification: A dynamic analysis of an acid rain game between Finland and the USSR. Environmental and Resource Economics 2, 161–181 (1992). https://doi.org/10.1007/BF00338241
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DOI: https://doi.org/10.1007/BF00338241