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Resource Management and the Mayor's Guarantee in French Water Allocation

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  • Ephraim Clark
  • Gérard Mondello

Abstract

This paper uses standard methods in stochastic calculus tomeasure the cost of the agency conflict that pits electedofficials of French municipalities against the communities theyrepresent in the management of the water supply. Under the Frenchlegal code, the municipalities are responsible for the watersupply and the elected officials are personally liable for anydamage due to negligence on their part. Uncertainty regardingexactly how negligence will be defined by the courts puts theelected officials in a precarious position. By delegatingauthority to an oligopoly of private firms, however, electedofficials can eliminate their personal liability, which istransferred to the delegated firm. Many studies argue thatdelegation locks communities into long-term contracts that areagainst their better interests. Thus, the agency conflict mayaffect the delegation decision to the detriment of the community.To determine whether or not this is true it is necessary to knowthe economic cost of the mayor's personal liability. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Ephraim Clark & Gérard Mondello, 2000. "Resource Management and the Mayor's Guarantee in French Water Allocation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(2), pages 103-113, February.
    • Handle: RePEc:kap:enreec:v:15:y:2000:i:2:p:103-113
    DOI: 10.1023/A:1008326220811
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    Cited by:

    1. Michele Moretto & Paola Valbonesi, 2004. "Opting-out in profit-sharing regulation," Industrial Organization 0403001, University Library of Munich, Germany.
    2. Ephraim Clark & Gérard Mondello, 2000. "Water Management in France: Delegation and Irreversibility," Journal of Applied Economics, Taylor & Francis Journals, vol. 3(2), pages 325-352, November.
    3. Jaehyung Lee & Heesun Jang, 2021. "Groundwater Extraction in the South Korea’s Jeju Island: A Real Options Game Approach under Price Uncertainty," Sustainability, MDPI, vol. 13(6), pages 1-11, March.
    4. Gérard Mondello, 2004. "Les conditions d’implantation des plans de prévention des risques naturels : une approche par la théorie des options réelles," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 73, pages 35-70.
    5. Wilfried Puwein & Margarete Czerny & Heinz Handler & Daniela Kletzan-Slamanig & Michael Weingärtler, 2004. "Modelle der "Public Private Partnership" im Lichte der theoretischen Diskussion und der empirischen Erfahrungen," WIFO Studies, WIFO, number 25399.
    6. Georg Meran, 2012. "Europäische Preisregulierungssysteme in der Wasserwirtschaft: Konzepte und Umsetzungsprobleme," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 81(1), pages 167-181.

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