Cooperative behavior and the feasibility of cost sharing in nonpoint source pollution control
Abstract
This study derives cost allocations for septic system management programs in the community of Potowomut, Rhode Island, using program preference models and cooperative game solutions. The management programs are designed to protect public drinking water and shellfishing in a local bay. A past attempt to implement an ordinance to improve septic systems was resisted by homeowners in Potowomut. Reallocating septic system improvement costs is expected to increase the probability of program or ordinance acceptance.^ Game theoretic methods are used to allocate the costs of septic system improvement programs within Potowomut. Values for n-player cooperative games in characteristic and partition function form define net benefit allocations to individual players, and a model describing homeowner preferences for different types of septic system management programs is estimated to define individual payoffs under different game strategies. The program preference model is estimated by fitting contingent choice data to a multinomial logit utility model; contingent choice data is collected from a mail survey of Potowomut homeowners. Comparisons of aggregate willingness-to-pay and annualized costs indicate what levels of abatement (i.e., number of new septic system connections) are financially feasible.^ The cooperative game consists of allocating costs, in the form of homeowner fees, such that all homeowners agree to implement the program. The three players are assumed to be representatives of (1) a wellhead protection district, (2) coastal shoreline area, and (3) a non-sensitive area where septic system improvements are not required. A range of homeowner fees are derived from Shapley values and incomplete cooperation (IC) values using different assumptions about homeowner attitudes, threat behavior assumptions, and population weights. The impact of septic system subsidies (i.e., grants) on Shapley and IC values are examined to (1) provide insight into the differences between Shapley and IC values as threat conditions change and (2) demonstrate the importance of using weighted values to acknowledge differences in the relative population sizes represented by the players. The results suggest that values for games in partition function form are applicable when the benefits of water quality protection are considered in program cost allocation. ^
Subject Area
Economics, Agricultural|Health Sciences, Public Health|Environmental Sciences
Recommended Citation
Christopher Jansen Miller,
"Cooperative behavior and the feasibility of cost sharing in nonpoint source pollution control"
(1998).
Dissertations and Master's Theses (Campus Access).
Paper AAI9908228.
http://digitalcommons.uri.edu/dissertations/AAI9908228