Tuesday, January 2, 2007

Royal odor externalities

Photo of the town Aqabah from the south-west.

The local newspapers in Israel reported recently in small print that King Abdullah II of Jordan launched a complaint with the Israeli government concerning unpleasant odors that reach his vacation home in Aqabah, across the border from Eilat, on the Red Sea. The source of the odor is cows that belong to Kibbutz Eilot several miles north of Eilat.

In his blog on January 1, 2007 Matt Kahn wrote (http://greeneconomics.blogspot.com/):

Does the Coase Theorem Apply in the Middle East? Cross-Border Odor Disputes
It's a hard life being a king. All work and no play but at least he provides an interesting case study for environmental econ teachers. Perhaps the siting of this livestock facility is no accident? International borders are a convenient place to locate such noxious stuff.Jordan king complains of Israeli odors….

This is an old story that comes to life whenever the direction of the wind is from the north-west. Most days the situation is bearable for the King and unbearable for the Israeli and European tourists in Eilat's hotels (to the left in the photo).

It is high time to impose an odor tax and to remove the externality.

1 comment:

EclectEcon said...

I trust this is tongue-in-cheek. There is no need to impose a tax so long as the transaction costs are less than the potential gains from trade. Surely the King can come up with a payment to induce change if the odor bothers him so much.