Collective decision making in an international river pollution model

In this paper, we study international river pollution problems. We introduce a model in which countries located along a river from upstream to downstream derive benefits from causing pollution, but also incur environmental costs from experiencing its own pollution and the pollution of all its upstream countries. The total welfare, being the sum of all benefits minus the sum of all costs, is maximized when all countries cooperate. Several principles from international water law are applied to find reasonable and fair distributions of the total welfare that can be obtained under full cooperation. Such a distribution of the welfare at efficient pollution levels can be implemented by monetary compensations.