Research on Ecological Compensation Mechanism of Transboundary Water Pollution Control on Left and Right Banks Based on Differential Game

Abstract

Only the contradiction between upstream and downstream is focused in the problem of transboundary water pollution for river basins and the "tragedy of Commons" between left and right banks is ignored. It is the fundamental reason to cause externality that the market mechanism can not play a role in transboundary water pollution control on the left and right banks of the river basin. The external effect of transboundary water pollution control on the left and right banks of the river basin can be internalized by using the ecological compensation mechanism under the leadership of the government, which is an effective means to solve the problem of transboundary water pollution on the left and right banks. Differential game theory is applied in this paper. The effects of ecological compensation mechanism on the government's pollution control efforts for the left and right banks of the transboundary river basin are investigated. The game equilibrium strategies about the government's pollution control efforts on the left and right banks under the three governance modes are analyzed separately. The three governance modes are no ecological compensation, ecological compensation and central government intervention respectively. The three governance modes are compared. The effects of the transboundary ecological compensation mechanism in the river basin are analyzed. The effectiveness of the conclusions is verified by numerical examples. The corresponding countermeasures are proposed. The theory basis for the ecological compensation mechanism of transboundary water pollution control is provided. The results show that when the problem of transboundary water pollution control in the river basin is appeared, it is inadvisable to fight alone for left and right bank governments under non-cooperative governance model. The overall benefits of the basin can be improved effectively under the central government intervention. However, when the right government provides enough funds for the left bank government to carry out ecological compensation, the initiative of the left bank government pollution control will be effectively stimulated and it is promoted to achieve the optimal overall benefits of the river basin.