DECENTRALIZATION OF RESPONSIBILITY FOR SITE DECONTAMINATION PROJECTS - A BUDGET ALLOCATION APPROACH

A major problem currently confronting central governments is how to optimally allocate resources for decontamination of polluted sites. 'Optimally' here refers to obtaining maximum environmental benefits with the limited resources available. An important issue in budget allocation is that of decentralization, given the magnitude of the information flows between regional and central level necessary in a fully centralized approach. This paper investigates the use of mathematical programming models to support allocation procedures to obtain maximum environmental effectiveness and economic efficiency. We consider the situation where regional authorities provide limited, summary information to the central government, which then allocates budgets. The central government aims to maximize total environmental benefits, subject to a central budget constraint (and constraints on other resources). The problem can be formulated as a mixed integer programming problem, but the size of the problem precludes the search for optimal solutions. We present an effective heuristic and include computational results on its performance.