Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87574
Authors: 
Houba, Harold
Ansink, Erik
Year of Publication: 
2013
Series/Report no.: 
Tinbergen Institute Discussion Paper 13-182/II
Abstract: 
Many water allocation 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 water allocation 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 Folk Theorem to the river sharing problem using the equilibrium concepts of subgame-perfect equilibrium and renegotiation-proof equilibrium. We show that, given the upstream-downstream asymmetry, sustainable agreements allow downstream agents to reap the larger share of the benefits of cooperation.
Subjects: 
river sharing
sustainable agreements
repeated sequential game
Folk Theorem
water allocation
renegotiation-proofness
JEL: 
C73
D74
F53
Q25
Document Type: 
Working Paper

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