Dynamic game in agriculture and industry cross-sectoral water pollution governance in developing countries

Abstract

Agriculture in developing countries is a vulnerable sector and is subsidized. Environmental restrictions on agriculture sector are minimal. The excessive use of chemical fertilizers and pesticides has caused serious non-point source water pollution. Although previous studies have focused on agricultural water pollution, the cooperation between agricultural and industrial sectors in water pollution mitigation has not been thoroughly discussed. In this context, this paper introduces a cross-sectoral water pollution dynamic model. We studied the feedback (subgame perfect) equilibrium of the non-cooperative game between two sectors. To discern the impact of environmental policy, we compared the equilibrium solutions of two scenarios that differ in terms of environmental policy for agricultural sector mitigation. The results show that when agricultural and industrial sectors work together to mitigate water pollution, the accumulated common pollutants level decreases; when sectors consider mitigation measures in their objectives, they tend to emit more pollutants; the damage produced by both sectors is lower when both sectors participate in mitigation. Our policy recommendation is that cross-sectoral water pollution control is essential and developing countries should include both agricultural and industrial sectors in environmental governance to maximize the coordination of cross-sectoral environmental policies.