The international financing of environmental protection: Lessons from efforts to protect the river Rhine against chloride pollution

Abstract

The history of international efforts to protect the river Rhine against chloride pollution challenges the widely held assumption that international financing is a more efficient instrument for resolving transboundary environmental problems among countries with heterogeneous preferences than the use of different reduction targets for individual actors, grace‐periods, or issue‐linkage. In the chloride case, high transaction costs of negotiating international exchanges of financing for environmental protection measures have resulted in agreements whose environmental protection value is very low. This insight is of interest particularly to the current debate on whether and how to finance environmental protection in central and eastern Europe as well as in developing countries.