Game theoretic analyses of nitrate emission reduction strategies in the Rhine river basin

Pollution of transboundary rivers requires cooperation between the countries involved in order to alleviate the consequences. This paper applies game theoretic analyses to nitrate emissions in the Rhine river basin. It assumes that the 50% emission reduction policy agreed upon by the International Rhine Committee is individually rational for each source. This enables the estimation of a revealed preference of the benefits involved. These are described by environmental damage functions. Emission reduction thus results in abatement costs, but also reduces environmental damage. The objective function is to minimise total costs, i.e. abatement costs and environmental damage. A number of different specifications for the environmental damage function are analysed to answer the question whether cooperation is individually rational for the negotiating partners in the International Rhine Committee. The analyses show that depending on the way the environmental damage function is derived, free riding is often, but not always, an interesting option.