Solving water pollution problems along the US–Mexico border

Abstract

The analysis demonstrates the importance of multilateral cooperation for water managers to tackle wastewater pollution along an international border. A differential game is applied empirically with data of abatement costs, environmental damages, trade flows and pollution dynamics. The framework offers a way to compare pollution control when the US and Mexico coordinate efforts and when they act independently. Results show that trade liberalization and cooperation are useful for dealing with transboundary pollution in a shared waterway. In order to investigate further the nature of cooperation along the entire border, an econometric estimation is performed that investigates the factors influencing Mexico and the US to initiate environmental improvement projects. Results show that cooperation depends on whether the project addresses transboundary wastewater pollution. Other types of pollution are not significant, nor are attributes such as how much a project costs. A project's ability to generate revenues to sustain itself significantly disadvantages the project for cooperative approval.