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A Game-Theoretic Model of Water Theft During a Drought

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  • Batabyal, Amitrajeet
  • Beladi, Hamid

Abstract

We study water use by two geographically proximate farmers in a particular region during a drought. The two farmers each have an endowment of time that can be used either to produce water or to steal water. The price of water is exogenously given. The goal of the two farmers is to maximize their wealth from water production and water theft. In this setting, we perform three tasks. First, we determine the Nash equilibrium of the game-theoretic interaction between the two farmers. Second, we study how this equilibrium depends on the ease with which water can be stolen. Finally, we show how the preceding equilibrium is impacted when there is no water theft and then we determine the maximum amount that a farmer would be willing to pay to prevent theft.

Suggested Citation

  • Batabyal, Amitrajeet & Beladi, Hamid, 2020. "A Game-Theoretic Model of Water Theft During a Drought," MPRA Paper 108346, University Library of Munich, Germany, revised 15 Jun 2021.
    • Handle: RePEc:pra:mprapa:108346
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    References listed on IDEAS

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    4. Gabriel A. Sampaio Morais & Felipe F. Silva & Carlos Otávio de Freitas & Marcelo José Braga, 2021. "Irrigation, Technical Efficiency, and Farm Size: The Case of Brazil," Sustainability, MDPI, vol. 13(3), pages 1-21, January.
    5. Mayumi, Kozo & Giampietro, Mario, 2010. "Dimensions and logarithmic function in economics: A short critical analysis," Ecological Economics, Elsevier, vol. 69(8), pages 1604-1609, June.
    6. Isha Ray & Jeffrey Williams, 1999. "Evaluation of Price Policy in the Presence of Water Theft," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 928-941.
    7. Reza Oladi, 2005. "Stable Tariffs and Retaliations," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 205-215, May.
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    More about this item

    Keywords

    Drought; Nash Equilibrium; Static Game; Water Theft; Willingness to Pay;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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