Scope and Sustainability of Cooperation in Transboundary Water Sharing of the Volta River

ZEF Discussion Papers on Development Policy, No. 124

46 Pages Posted: 22 Sep 2008

See all articles by Anik Bhaduri

Anik Bhaduri

University of Bonn - Center for Development Research (ZEF)

Nicostrato Perez

University of Bonn - Center for Development Research (ZEF)

Jens Liebe

University of Bonn - Center for Development Research (ZEF)

Date Written: September, 22 2008

Abstract

The paper explores the scope and sustainability of a self-enforcing cooperative agreement in the framework of a game theoretic model, where the upstream and downstream country, Burkina Faso and Ghana respectively in the Volta River Basin, bargain over the level of water abstraction in the upstream. In the model we consider the case where the downstream country, Ghana, offers a discounted price for energy export to the upstream country, Burkina Faso, to restrict its water abstraction rate in the upstream. The paper examines the benefits and sustainability of such self-enforcing cooperative arrangements between Ghana and Burkina Faso given stochastic uncertainty in the river flow. The findings of the paper suggest that at the present condition, the marginal benefit of Burkina Faso from increasing the water abstraction is much higher than that of Ghana's marginal loss. However, the paper finds that if both countries' water abstraction rates are at a much higher level, then the marginal loss of Ghana increases phenomenally from similar increase in water abstraction rate by Burkina Faso. Under such circumstances, there is an opportunity for Ghana to provide side payments in terms of discounted export price of power in order to motivate Burkina Faso to restrict water abstraction.

Keywords: Bargaining, Cooperation, Transboundary, Uncertainty, Volta River Basin

JEL Classification: C78

Suggested Citation

Bhaduri, Anik and Perez, Nicostrato and Liebe, Jens, Scope and Sustainability of Cooperation in Transboundary Water Sharing of the Volta River (September, 22 2008). ZEF Discussion Papers on Development Policy, No. 124 , Available at SSRN: https://ssrn.com/abstract=1271825 or http://dx.doi.org/10.2139/ssrn.1271825

Anik Bhaduri (Contact Author)

University of Bonn - Center for Development Research (ZEF) ( email )

Walter-Flex-Str. 3
Bonn, NRW 53113
Germany

Nicostrato Perez

University of Bonn - Center for Development Research (ZEF) ( email )

Walter-Flex-Str. 3
Bonn, NRW 53113
Germany

Jens Liebe

University of Bonn - Center for Development Research (ZEF) ( email )

Walter-Flex-Str. 3
Bonn, NRW 53113
Germany

HOME PAGE: http://www.glowa-volta.de

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