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

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Selection and execution of site decontamination pojects is often best left to local authorities, in accordance with the subsidiarity principle, even though the budget for such projects is made avaible 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 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

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/Inseadwp1994/94-44.pdf

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Copyright INSEAD. All rights reserved