From Pollution Control Cooperation of Lancang-Mekong River to “Two Mountains Theory”

“Lucid waters and lush mountains are invaluable assets” (referred to as the “Two Mountains Theory”) plays an important role in the process of controlling environmental pollution. This article introduces this practice with an example of pollution control in the Lancang-Mekong River Basin (LMRB). The research considers that the upstream and downstream countries can carry out water pollution control by imposing fines on enterprises that cause ecological damage and investing in pollution control resources. Firstly, the differential game model of pollution control by individual countries and international cooperation is established. Then, a differential game model of joint pollution control with compensation mechanism is established under the cooperation framework. Finally, the feedback Nash equilibrium of each state is obtained. The study shows that in the process of industrial pollution control by countries in the LMRB alone, due to the one-way externality of water pollution control, the more downstream countries are, the more resources will be invested in pollution control and the fewer fines will be imposed on enterprises that cause ecological damage. At the beginning stage of management, if more pollution control resources are input, fewer countries will participate in cooperation, and the fines for polluting enterprise would be less. When the amount of fines for enterprises is relatively small, the establishment of a river pollution compensation mechanism is not conducive to the input of pollution control resources. On the contrary, it is beneficial for the state to invest in pollution control resources. The coordinated development of economic development and ecological civilization construction is the core purpose of the “Two Mountains Theory”. Therefore, the case of the LMRB fully illustrates the feasibility of the “Two Mountains Theory” based on cooperation. © 2022 by the authors. Licensee MDPI, Basel, Switzerland.