Negative Externalities of Two Dams Prove Caveats to Coase Theorem

When the Bonneville and Glen Canyon Dams were constructed over 40 years ago, they were viewed as a public good that would bring affordable and efficient power to thousands of people surrounding the dams. However, the negative externalities of the two dams were not realized until completion of the dam and were exacerbated in the ensuing decades. As a result, the once abundant salmon population near the Bonneville Dam is currently nearing extinction. Additionally, the Glen Canyon Dam has altered the amount of water all along the Colorado River reaching as far down as Mexico, which has resulted in negatively altered ecosystems and negatively altered lifestyles for communities along the Colorado River. So...what can be done to remedy these unforeseen negative externalities? The Coase Theorem states that "In the absence of transaction and bargaining costs, affected parties to an externality will agree on an allocation of resources that is both allocatively efficient and independent of any prior assignment of property rights." Therefore, according to the Coase theorem, involved parties could derive an economically efficient outcome independently. However, in these two situations, there are a couple of reasons that prevent this from occuring. First, how can one quantify the worth of salmon and their lives? Are their lives more important than the power produced by the dam? These questions are basically impossible to agree on and make negotiations extremely hard. Secondly, in both cases there are very many parties involved, which makes it nearly impossible for all parties to negotiate a solution that everyone can live with. Therefore, I conclude that in these two situations, the Coase theorem cannot and will not hold, and government intervention is necessary.