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Game Practice and the Environment

Edited by Carlo Carraro and Vito Fragnelli

This book summarises the latest achievements of researchers involved in the application of game theory to the analysis of environmental matters. It provides an overview of different methods and applications, and gives the reader new insights on the solutions to complex environmental problems. The authors investigate various game theoretic approaches, including cooperative and non-cooperative game theory, and analyse both dynamic and static games. They illustrate the application of these approaches to global and local environmental problems, and present novel but effective tools to support environmental policy making. In particular, they focus on three important issues; climate negotiations and policy, the sharing of environmental costs, and environmental management and pollution control.
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Chapter 7: Co-Insurance Games and Environmental Pollution Risk

Vito Fragnelli and Maria Erminia Marina


Vito Fragnelli and Maria Erminia Marina 1. INTRODUCTION In this chapter we consider a situation in which a large risk has to be insured and in particular the case of environmental pollution risks that depend on firms that in their production processes may have as a side-effect the release of polluting wastes that damage the environment. Firms may interact with the environment in different ways; more precisely they can alter the basic environment, influence the possibility of using it if they damage public or private goods, compromise human health directly or indirectly, contaminate biological resources and ecosystems. The consequences may be described as damage to persons and/or materials or interruption of various activities (industrial, agricultural or recreational). We want to recall some environmental pollution risks according to a simple classification: ● ● ● ● ● air pollution, generated by emissions, harmful gases, exhaust fumes, stenches, waste disposal, chemical production; water pollution, when factories discharge effluents into rivers; soil pollution , deriving from rubbish, solid wastes, industrial wastes, for example from farms that use chemical manure or pesticides or from factories that dispose of their waste in the soil; marine pollution, where coastal firms get rid of waste and sewage into the sea or resulting from oil tanker accidents; acoustic pollution, due to high noise levels and vibrations with risk to workers and neighbouring inhabitants. In order to limit the costs related to environmental risk a firm generally effects an insurance policy that covers both third-party liability for any damage that...

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