A Game Theoretic Approach to Assess the Impacts of Major Investments on Transboundary Water Resources: The Case of the Euphrates and Tigris

There are varying and inconsistent claims among countries sharing the same river basins. While upstream countries are asserting that they regulate flows through built-up reservoirs (enabling flood prevention) and reduce seasonal flow variations (providing water during drought seasons), downstream countries criticize upstream countries for excessive withdrawals and declining annual flows. Behind the scene, almost every basin country unilaterally envisions of ambitious projects demanding extensive water withdrawals for their prospective development and growth. This study establishes a methodology to measure the rational economic and political impacts of extensive reservoir projects throughout a basin, using the case of the Euphrates and Tigris. This methodology uses both linear programming applications calculating country and coalition benefits, and game theory concepts (core and Shapley value) for evaluating the impacts of reservoirs. The Euphrates and Tigris River Basin Model (ETRBM) is extended by adding the time dimension. In conjunction with time, reservoir capacities are incorporated into the model as a new set of parameters enabling resources allocations over multiple periods. In a rational economic view, the existence of reservoirs, while providing certain advantages in allocating water overtime, provides varying geopolitical powers to upstream and downstream basin countries. As a result of model applications, it is observed that basin-wide coalitions may potentially eliminate construction of excessive reservoir capacities, and, therefore, unnecessary investment costs and evaporation losses. It is also observed that assuming the absence of downstream reservoirs, the upstream reservoirs provide significant, first, economic benefit to the all forms of coalitions with upstream country and associated parties and, second, power to the country having the reservoirs in any coalition scenario. However, again in a game theoretic perspective, the power of upstream countries looses some of its weight when downstream reservoirs are incorporated. During drought years, the availability of reservoirs ensures extensive core solutions and encourages a grand coalition among all parties. Copyright Springer Science+Business Media B.V. 2009