Abbink, Klaus Moller, Lars Christian O'Hara, Sarah
Year of Publication:
CeDEx Discussion Paper, The University of Nottingham 2005-14
With the disintegration of the USSR a conflict arose between Kyrgyzstan, Uzbekistan and Kazakhstan over the Syr Darya river. Upstream Kyrgyzstan operates the Toktogul reservoir which generates hydropower demanded mainly in winter for heating. Downstream Uzbekistan and Kazakhstan need irrigation water in summer, primarily to grow cotton. Regional agreements obliging Kyrgyzstan to high summer discharges in exchange for fossil fuel transfers in winter have generally been unsuccessful, notably due to lack of trust between the parties. Striving for self-sufficiency in irrigation water, Uzbekistan initiated new reservoir construction. This paper examines their economic impact. We report a laboratory experiment modelling the Syr Darya river scenario as a multi-round three-player trust game with non-binding contracts. Payoff schemes are estimated using real-life data. While basinwide efficiency maximisation requires regional cooperation, our results demonstrate that cooperation in the laboratory is hard to achieve. Uzbek reservoirs improve the likelihood of cooperation only weakly and their positive economic impact is limited to low-water years.
Central Asia common-pool resources conflict dams hydropower irrigation experimental economics regional public goods transboundary rivers Syr Darya trust games water