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Self-enforcing Agreements on Water allocation

Author

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  • Erik Ansink

    (Wageningen University)

Abstract
Many water allocation agreements in transboundary river basins are inherently unstable. Due to stochastic river flow, agreements may be broken in case of drought. The objective of this paper is to analyse whether water allocation agreements can be self-enforcing. An agreement is modelled as the outcome of bargaining game on river water allocation. Given this agreement, the bargaining game is followed by a repeated extensive-form game in which countries decide whether or not to comply with the agreement. I assess under what conditions such agreements are self-enforcing, given stochastic river flow. The results show that, for sufficiently low discounting, every efficient agreement can be sustained in subgame perfect equilibrium. Requiring renegotiation-proofness may shrink the set of possible agreements to a unique self-enforcing agreement. The solution induced by this particular agreement implements the “downstream incremental distribution”, an axiomatic solution to water allocation that assigns all gains from cooperation to downstream countries.

Suggested Citation

  • Erik Ansink, 2009. "Self-enforcing Agreements on Water allocation," Working Papers 2009.73, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2009.73
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    Cited by:

    1. Marianna Khachaturyan & Karina Schoengold, 2019. "Applying Interconnected Game Theory to Analyze Transboundary Waters: A Case Study of the Kura–Araks Basin," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 5(01), pages 1-32, January.
    2. Erik Ansink & Harold Houba, 2014. "The Economics of Transboundary River Management," Tinbergen Institute Discussion Papers 14-132/VIII, Tinbergen Institute.
    3. Benjamin Ouvrard & Arnaud Reynaud & Stéphane Cezera & Alban Thomas & Dishant Jojit James & Murudaiah Shivamurthy, 2023. "Distributive Justice in the Field: How do Indian Farmers Share Water? ," Working Papers hal-04150233, HAL.
    4. Mason, Charles F. & Polasky, Stephen & Tarui, Nori, 2017. "Cooperation on climate-change mitigation," European Economic Review, Elsevier, vol. 99(C), pages 43-55.
    5. Erik Ansink & Hans-Peter Weikard, 2015. "Composition properties in the river claims problem," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(4), pages 807-831, April.
    6. Kong, Wen & Knapp, Keith C., 2014. "Economic and Political Equilibrium for a Renewable Natural Resource with International Trade," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170591, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    Self-Enforcing Agreement; Repeated Extensive-Form Game; Water Allocation; Renegotiation-Proofness;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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