Abstract for: Do Indemnities Make Pollution Victims Happier?:A System Dynamics Perspective

This study examined the reasons for the declining economic quality of life of pollution victims residing in the most severely dioxin-polluted site in Southern Taiwan. At this site, the government has spent enormous amounts of money to compensate victims for their losses and alleviate their anger, and to alleviate the local poverty problem. We constructed a problem-oriented system dynamics model, and identified the reinforcing feedback mechanism in the system that renders the government’s expenditures ineffective based on the simulation results. Because the cash compensation program activates a reinforcing feedback mechanism, worsening the economic quality of life among victims, we suggest that both the government and pollution victims be prudent in primarily employing cash compensation programs to solve problems caused by pollution.