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Cooperative Game Theory and its Application to Natural, Environmental, and Water Resource Issues: 3. Application to Water Resources


Irene Parrachino


Università degli Studi di Genova

Ariel Dinar


World Bank - Agriculture and Rural Development Department

Fioravante Patrone


Università degli Studi di Genova - Dipartimento di Matematica

November 2006

World Bank Policy Research Working Paper No. 4074

Abstract:     
This paper reviews various applications of cooperative game theory (CGT) to issues of water resources. With an increase in the competition over various water resources, the incidents of disputes have been in the center of allocation agreements. The paper reviews the cases of various water uses, such as multi-objective water projects, irrigation, groundwater, hydropower, urban water supply, wastewater, and transboundary water disputes. In addition to providing examples of cooperative solutions to allocation problems, the conclusion from this review suggests that cooperation over scarce water resources is possible under a variety of physical conditions and institutional arrangements. In particular, the various approaches for cost sharing and for allocation of physical water infrastructure and flow can serve as a basis for stable and efficient agreement, such that long-term investments in water projects are profitable and sustainable. The latter point is especially important, given recent developments in water policy in various countries and regional institutions such as the European Union (Water Framework Directive), calling for full cost recovery of investments and operation and maintenance in water projects. The CGT approaches discussed and demonstrated in this paper can provide a solid basis for finding possible and stable cost-sharing arrangements.

Number of Pages in PDF File: 46

Keywords: Town Water Supply and Sanitation, Environmental Economics & Policies, Water Supply and Sanitation Governance and Institutions, Water Supply and Systems, Water and Industry

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Date posted: November 24, 2006  

Suggested Citation

Parrachino, Irene and Dinar, Ariel and Patrone, Fioravante, Cooperative Game Theory and its Application to Natural, Environmental, and Water Resource Issues: 3. Application to Water Resources (November 2006). World Bank Policy Research Working Paper No. 4074. Available at SSRN: http://ssrn.com/abstract=946833

Contact Information

Irene Parrachino (Contact Author)
Università degli Studi di Genova
Via Vivaldi 5
Genova, 16126
Italy
Ariel Dinar
World Bank - Agriculture and Rural Development Department ( email )
1818 H Street, N.W.
Washington, DC 20433
United States
202-473-0434 (Phone)
Fioravante Patrone
University of Genoa - Dipartimento di Matematica ( email )
Via Dodecaneso 35
16146 Genoa
Italy
+39-010-3536835 (Phone)
+39-010-3536752 (Fax)
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