On the Coordination of the European Agri-environmental and Water Internalizing Policies

The point of departure of this work is the lack of coordination of european environmental internalizing policies. At the national level, while the water authority generally has to internalize the negative externalities of water extraction, the agricultural one aims at encouraging environmentally friendly one. More locally, considering an aquifer as being the only vector of environmental effects, we show that the externalities occuring can compensate themselves in such a way that the open-loop Nash game played by the two distinct authorities in charge of these policies is inefficient. In this special case, we propose to implement a coordinated policy based on a double fiscal scheme also showed budget balanced.