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Sustainable agreements on stochastic river flow

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  • Ansink, Erik
  • Houba, Harold

Abstract

Many river sharing 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 analyze whether river sharing agreements can be self-enforcing, or sustainable. We do so using an infinitely-repeated sequential game that we apply to several classes of agreements. To derive our main results we apply the equilibrium concepts of subgame-perfect equilibrium and renegotiation-proof equilibrium to the river sharing problem. We show that, given the upstream–downstream asymmetry, sustainable agreements allow downstream agents to reap the larger share of the benefits of cooperation.

Suggested Citation

  • Ansink, Erik & Houba, Harold, 2016. "Sustainable agreements on stochastic river flow," Resource and Energy Economics, Elsevier, vol. 44(C), pages 92-117.
  • Handle: RePEc:eee:resene:v:44:y:2016:i:c:p:92-117
    DOI: 10.1016/j.reseneeco.2016.02.005
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    Cited by:

    1. Mason, Charles F. & Polasky, Stephen & Tarui, Nori, 2017. "Cooperation on climate-change mitigation," European Economic Review, Elsevier, vol. 99(C), pages 43-55.
    2. 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.
    3. Erik Ansink & Harold Houba, 2014. "The Economics of Transboundary River Management," Tinbergen Institute Discussion Papers 14-132/VIII, Tinbergen Institute.
    4. 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.

    More about this item

    Keywords

    River sharing; Sustainable agreements; Repeated sequential game; Folk Theorem; Water allocation; Renegotiation-proofness;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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