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I Economic Incentiv€\s.\ Under this das s of c~ntrol policies are SU~h . items as transfer payments from those suffering the external effects to . o.j;;o. o o 00 those causing them, in exchange for quality improving practices, taxation, of polluting activities to make them more costly, subsidy of quality improve- ments to make them more profitable, and even localized product price . fixing that may decrease the net revenues of activities that cause negative externalities downstream. . In recent years a sizeable literature has arisen on the issue ci 'whether or not externalities, such as those discussed here, can be optimally regulated by negotiations between the injuring and the injured parties. R. H. Coase demonstrated in his now classic articleS that this private . bargaining would produce a socially optimal result, providing transactions costs were zero. Potential gainers would pay the polluters to engage . in practices that would reduce their pollution levels and thus with the paYlnents this transaction could make both groups better off. Transactions costs . (arriving at a deal) could be small if the number of negotiating parties is small. They most certainly would not be small in the situation we are !.-,. tl'';; considering where the number of irrigators causing the externality and those harmed by it number in the tens of thousands. 6 There is no conceivable way . that they could bargain individually to the socially optimal level of salinty and water use. This is probably why salinity abatement must be "public" . rather than a private activity. Of course, possibilities may exist for representatives of groups of indviduals (say, state 'government officials) . 16 .