Incentive coordination for transboundary water pollution control: The case of the middle route of China’s South-North water Transfer Project

Abstract

Abstract The transboundary water pollution control is often complex and challenging due to the multiple jurisdictions or countries involved. However, current studies fail to comprehensively examine the issue of incentives in transboundary water pollution control, nor do they consider dynamic changes in the behavior of local actors. Multiple administrative boundaries and multiple actors are spanned in the middle route of China’s South-North Water Transfer Project (SNWTP-MR) making it an ideal case for applying the theory of neoliberal environmentality to examine the governance of transboundary water pollution, as it provides a lens to carefully observe how incentive coordination as a techne of neoliberal environmentality shapes the behavior of local actors to improve water quality. By constructing a baseline scenario, an eco-compensation scenario, and an incentive-coordination scenario, this paper provides a differential game modeling approach to examine and compare the behavioral differences of local actors under different scenarios, and to understand the benefits distribution mechanism under Chinese non-democratic and non-western system. The findings demonstrate that incentive coordination for transboundary water pollution control has the same political and economic roots as neoliberal environmentality. Moreover, compared to eco-compensation modeled as a leader-follower game, incentive coordination as a social planner optimization makes local actors’ interests more compatible with improving water quality, and thus is more similar to the voluntary transactions envisaged by PES. Finally, the neoliberal incentive structure constructed by incentive coordination for transboundary water pollution control can help to improve the effectiveness of water pollution control under the existing eco-compensation systems that rely on command-and-control instruments.