Imagine a factory located upstream that pollutes a river. It produces steel for the automotive industry. Downstream, local fishermen find they catch less fishes due to the pollution.Both are flourishing businesses that produce wealth and prosperity for the community.

But there is a problem environmental economists must deal with:

1. Can you suggest any criteria that could be used to decide on who has the right to use the river? The factory, the fishermen, both?

2. Can you propose any instrument or agreement to solve the problem?

This river is important to both the factory and the fishermen in the sence that it seems to be part of their business transaction. The company regards the rivers as a dumping place in their produaction process and the fishermen gets the fish from the river. In this case, it is a public good to both of them and public goods are very difficult to be managed, but they should be managed. Several options could be used to ensure that the decission made is benefitial to both parties but also does not affect the economy of the community. Most of the times, economics and Environmental issues work against each other but can be handled in a way that both contributes to the development of the community. Therefor we need to use the multicriteraia approach to have veiws from all the sectors who have been affected should be taken into account. This will ensure good economic growth since both parties will ably carry out their business effectively.

In my opinion, the value of pollotion done to the river can be valued but will not have the real value as regard to what extent the river has lost its value, on the other hand it will not give us the exact amount of fish have been lost in the process.  This being the case we can only try to stop the harm from continuing,  but also to ensure that we do not create precedence. Threfore, we need to let the one who has contributed to the pollution pay for that, I therefore feel that first of all we need to assess if the company is really really responsible for the pollution of the river, through laboratory tests. After that we need to asse the value of the penalty and let the company pay for the pollution.

As the river is a public good, we might face the same situation in the future and to avoid that we need tools in place. In my opinion, i feel both the taxes and the regulation can work in for this case, however since we are talking about industrial wastes the taxes will be the best option, but coupled with a good monitoring system to ensure effective implementation of the system. In addition in determining the tax we need to take into account of the extent of pollution done already.

So in short;

• We need to use the multi  Criterial approach since the river is a public good, so we need to have it done in a participatory manner.
• Both the company and the fishermen have the right to use the river.
• We need to asses if the company is really responsible for the polution through laboratory test and compare the concentation of the company’s effluent and that of the river.
• Assess the value of the penalty to be paid by the company.
• Implement the tax approach with a good monitoring system to ensure effective implementation.