When pollution crosses national borders, polluting countries do not experience the full benefits of pollution control. These spillovers may result in environmental degradation, unless countries successfully negotiate to resolve the problem. Although a theoretical literature has developed on the conditions for international environmental agreements, there are few econometric studies of countries' behavior in practice. The proposed project addresses this deficit in two ways. First, it examines the success of negotiations in practice, by looking for evidence that pollution levels rise with the extent to which resources are shared by different countries. Second, it tests some predictions about the conditions under which countries can receive weight in each others' decisions. The analysis focuses on water quality in rivers, a resource that ranges from entirely domestic to international. The project will estimate an empirical model of river water quality. Two data sets provide information on water quality at monitoring stations on many different rivers around the world for over two decades. The data sets are the Global Emissions Monitoring System Water Quality Monitoring Project (GEMS/Water), managed by the United Nations Environmental Program, and the OECD Environmental Data Compendium. Data on determinants of water quality at the monitoring stations in these data sets will be gathered from a variety of sources. A Geographic Information System (GIS) will be used to develop variables related to the river system, such as upstream and downstream population and land use. The research will take several approaches to assess the role of spillovers. Water quality at monitoring stations on domestic river systems will be compared with those on international river systems. The analysis will also explore the effects of continuous measures of crossborder effects, such as the proportion of the affected population in downstream countries. To consider the role of international negotiations, the analysis will examine whether factors that might facilitate agreements, such as the international trade relationship between the countries, determine observed pollution levels. In all these analyses, the estimated equations will include physical characteristics of the rivers and economic and political conditions. Some equations will also include country effects to address other heterogeneity. This study will provide empirical evidence on the extent of environmental degradation due to international spillovers and an assessment of relationships that help resolve these problems. In addition to its direct products, the project will create data on river attributes at monitoring stations in the GEMS/Water and OECD data sets that may be useful for future environmental research.
