Environmental and Resource Economics

, Volume 7, Issue 3, pp 287–305 | Cite as

An efficient budget allocation policy for decentralisation of responsibility for site decontamination projects

  • Charles J. Corbett
  • Frank J. C. Debets
  • Luk N. Van Wassenhove
Article
  • 71 Downloads

Abstract

Selection and execution of site decontamination projects is often best left to local authorities, in accordance with the subsidiarity principle, even though the budget for such projects is made available through a central authority. In this paper we suggest a practical budget allocation policy which a central authority can employ to allocate budgets to local authorities, while still optimising the central authority's environmental objective function. The procedure is fully consistent with the principle of decentralisation of responsibility for selection and execution of projects, and requires a minimum information exchange between local and central levels. Despite the information asymmetry between local and central levels, incentive compatibility problems can be (partially) prevented by choosing an appropriate evaluation mechanism. At the same time, the procedure is computationally effective and efficient, and can guarantee a fair budget allocation, making it easy to implement and politically acceptable.

Key words

Budget allocation decentralisation site decontamination mathematical programming Groves mechanism 

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Copyright information

© Kluwer Academic Publishers 1996

Authors and Affiliations

  • Charles J. Corbett
    • 1
  • Frank J. C. Debets
    • 1
  • Luk N. Van Wassenhove
    • 1
  1. 1.INSEADFontainebleau CedexFrance

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