• Environmental and Resource Economics Review
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• v.15 no.5
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• pp.939-959
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• 2006

This paper studies the introduction of flood quota system for efficient flood prevention. In the present system where local governments decide its flood prevention independently, the optimal flood prevention in a river basin can not be achieved. Thus, the flood quota system is necessary. In deciding the flood quota for each local government in a river basin, its social and economic characteristics as well as geographical feature of the area should be considered. In order to promote the cooperation among local governments in a river basin, the flood quota is necessary to be accompanied with the trading system of the quota.