Basin Eco-Compensation Strategy Considering a Cost-Sharing Contract

Based on differential game theory, this paper constructs a centralized game model, a Nash noncooperative game model and a game model with a cost-sharing contract. This paper discusses the interactive game strategy between the central government’s participation in subsidies and the upstream and downstream sharing of the cost of pollution control, and we obtain and compare the optimal feedback strategies and trajectory of pollution control with time upstream and downstream of a basin. The introduction of the game model for cost-sharing contracts not only maximizes the benefits in the basin but also increases the amount of pollution control, improves the ecological environment of the basin, and enhances its capital attractiveness. In addition, it is found that the central government’s subsidies have an impact on the decision-making behavior of local governments, especially in the case of introducing cost-sharing contracts. Central government subsidies can increase the enthusiasm of upstream and downstream local governments for long-term cooperation in pollution control and emission reduction.