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Linking The Unlinked: Transboundary Water-Sharing Under Water-For-Leverage Negotiations

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  • Eskander, Shaikh
  • Janus, Thorsten
  • Barbier, Edward

Abstract

We develop a game-theoretic framework of negotiation over sharing of trans-boundary resources between neighboring countries. The downstream country offers a non-water “leverage” good in exchange for water access and makes a take-it-or-leave-it offer to the upstream country. The downstream country can further invest in water provision before the negotiations. We compare three types of outcomes: the first-best outcomes where an “ex-ante social planner” choses both the water investment and the water and leverage goods exchanged in the negotiations; the outcome when an “ex-post social planner” only enters at the negotiation stage; and the outcome of bilateral negotiations. We argue that all three cases can be empirically realistic; show that the outcome with the ex-post social planner can distort the downstream country’s investment incentive; and that the bilateral negotiation outcome can lead to water investment either below or above the efficient/ex-ante planner’s preferred choice.

Suggested Citation

  • Eskander, Shaikh & Janus, Thorsten & Barbier, Edward, 2016. "Linking The Unlinked: Transboundary Water-Sharing Under Water-For-Leverage Negotiations," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235650, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea16:235650
    DOI: 10.22004/ag.econ.235650
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    References listed on IDEAS

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    1. Fariba Avarideh & Jalal Attari & Ali Moridi, 2017. "Modelling Equitable and Reasonable Water Sharing in Transboundary Rivers: the Case of Sirwan-Diyala River," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(4), pages 1191-1207, March.

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