A Negotiation Model of Eco-Compensation Standards for Transboundary Water Pollution

Abstract

The establishment of eco-compensation mechanism for transboundary water pollution has been a hot issue. The key point is the determination of compensation standards, which can not only consider respective benefits, but also reflect fairness and rationality of compensation. This paper first gave the gray compensation interval, and then used bargaining game to narrow the interval and got specific compensation standards. The bargaining model of eco-compensation standards under finite and infinite bargaining conditions was established by applying Rubinstein bargaining model. The established model was applied to Huojia East Stele Village section in Jiaozuo to analyze the determination of eco-compensation standards. The impacts of bidding order and discount factor on compensation standards was discussed. The impact factor analysis demonstrates, in finite bargaining, the compensation standard is related to discount factor, the duration of the biding stage, and the last bidder; in infinite bargaining, the standard is related to discount factor and the first bidder.