A copper mine in Mexico is leaking acid into a river, which cause the maniple water supply to seven towns to be shut down because of the danger. The Coase Theorem says that the people affected should be able to bargain with the mining company for some type of settlement. However, because seven towns were affected any one of them could throw a wrench into the process by holding out. There is no sign of the governments of the towns, on behalf of the population, bargaining with the mining company for a settlement. However, the mine has set up a fund $147 million in order to pay for environmental damages, but it does not seem that they are helping the people whose water supply was affected.
I think it is bullshit that they seem to be getting off pretty easily from any damage they have caused to the people in those towns. The company did not notify anyone about the spill until 24 hours after it occurred. The spill not only meant people couldn't get water, but education as well. Eighty eight schools closed because of the uncertainty of drinking water. The mine is only going to pay for the damage to the environment, but they caused much more damage than that. People went without water and education because of the spill.
I believe this is why companies that use dangerous chemicals should be heavily regulated. The spill did not occur because of malicious intent, it happened on accident because of heavy rains. Had there been enough supervision, the accident might not have occurred. Maybe the regulation would have caused “undue” burden on the firm at the time, but if it had been in place at the time of the spill this could have been avoided, mitigating the undue costs of regulation.
This is a situation where the coase theorem is useless. No one in this situation has property rights over the river. Each town affected most likely has rights over their municipal water supply, but the copper mine has been unwilling to bargain. Each town would have to work together to bargain with the mine since the pollution in the river affects each of their municipal water supplies. This is yet another example of why everything cannot be solved by the free market. The mine did not notify anyone until 24 hours afterward and has been resistant to investigation ever since. If regulation had been a main priority, the spill probably does not happen in the first place. The government now needs to step in and be more firm towards the mining company, in order to secure a proper settlement for their citizens.
http://thinkprogress.org/climate/2014/08/18/3472343/mexican-mining-spill-border-88-schools/
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