JOURNAL OF ENVIRONMENTAL ECONOMICS AND MANAGEMFST 15,129-142 (1988) Environmental Negotiation: Its Potential and Its Economic Efficiency*

Negotiation is increasingly viewed as a desirable alternative to courtroom conflict between industrialists and environmentalists. The “court battle ” is often costly, t ime-consuming, uncertain, and all-or-nothing; negotiation promises a cheaper, quicker, mutually acceptable outcome. This paper examines the conditions under which there is scope for a negotiated compromise; and it examines the conditions under which a negotiated compromise is economi-cally efficient. Its principal result is a warning: there is no reason to expect that environmental negotiation conducted under threat of court battle will produce a socially desirable outcome. 8 1988 Academic Press. Inc. Mediation should by all means be encouraged. It can have a valid and important place in the early stages of disputes that revolve around such issues as the exact location of a power plant or dam, or the time schedule an industry might be allowed for abating an environmental nuisance.... Clearly, the more cases that can be settled without recourse to the judiciary, with all its cost and delay, the better