Contracting for Environmental Property Rights : The Case of Vittel

Based on a case of contracting for environmental property rights, we explore several implications of applying Coase's insights. The case study adds empirical content to transaction costs concepts by analyzing the design and implementation of a contractual arrangement between a pollutee - a bottler of mineral water, Vittel - and several polluting farmers. We analyze the bargaining to determine how transaction cost issues (valuation disputes, bilateral monopoly conditions, and third-party effects) were overcome and how the parties succeeded in contracting for environmental rights. We compare the Vittel case with similar cases (Katell-Roc, Auxerre, and Munich), to draw lessons for rights negotiations