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Cost allocation for a regional wastewater treatment system
Author(s) -
Loehman E.,
Orlando J.,
Tschirhart J.,
Whinston A.
Publication year - 1979
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1029/wr015i002p00193
Subject(s) - cost allocation , shapley value , incentive , game theory , order (exchange) , wastewater , economies of scale , cooperative game theory , environmental economics , environmental science , economics , water resource management , computer science , environmental engineering , microeconomics , finance , accounting
There are economies of scale in the construction of regional wastewater treatment systems. Effluent dischargers have the option of participating in a regional system or constructing separate smaller systems. In order to encourage participation in a regional system so that the economies are realized, the cost allocation method employed must offer economic incentives. The cost allocation problem is viewed in game theoretic terms, and the Shapley value (a game theory solution) is suggested as an allocation method. The method is applied to the Meramec River Basin in Missouri where eight dischargers are identified. The problems of application are discussed and the reactions of the eight dischargers are cited.