Fair Allocation of Riparian Water Rights

Abstract

We take an axiomatic approach to the allocation of riparian water rights. We formalize ethical or structural properties as axioms of allocation rules. We show that several combinations of these axioms characterize focal rules implementing the principle of Territorial Integration of all Basin States in various forms. One of them connects to the Shapley value, the long-standing centerpiece of cooperative game theory. The others offer natural compromises between the polar principles of Absolute Territorial Sovereignty and Unlimited Territorial Integrity. We complete our study with an empirical application to the allocation of riparian water rights in the Nile River.

Keywords: water, sharing, fairness, rights, axioms.