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Damming Trans-boundary Rivers: A Welfare Analysis of Conflict and Cooperation

Author

Listed:
  • Yuyu Zeng

    (VU University Amsterdam, The Netherlands)

  • Harold Houba

    (VU University Amsterdam, The Netherlands)

  • Ariel Dinar

    (University of California, Riverside, United States)

  • Miroslav Marence

    (UNESCO-IHE Institute for Water Education, The Netherlands)

Abstract

Dams are essential for water storage and hydropower generation, but change river flow patterns and endanger local environments. Dam projects may further exacerbate already existing problems in trans-boundary rivers. We consider three scenarios of institutional factors: (1) each country pursues its own interests, (2) efficient cooperation along the river and (3) partial cooperation among neighboring countries. We conduct cost-benefit analyses for these scenarios incorporating dam projects and their externalities. We demonstrate our approach for the Mekong River incorporating expert hydrological knowledge regarding installed hydropower capacity and dam location instead of the standard economic assumptions of such costs. Our results show that cooperation between Laos and Cambodia internalizes the negative impacts of dam construction in Laos on fishery in Cambodia, and Laos refrains from building some planned dams. Our results also hint that the 1995 Mekong agreement among Thailand, Laos, Cambodia and Vietnam is internally stable.

Suggested Citation

  • Yuyu Zeng & Harold Houba & Ariel Dinar & Miroslav Marence, 2016. "Damming Trans-boundary Rivers: A Welfare Analysis of Conflict and Cooperation," Tinbergen Institute Discussion Papers 16-090/II, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20160090
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    File URL: https://papers.tinbergen.nl/16090.pdf
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    References listed on IDEAS

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    1. Ariel Dinar & Shlomi Dinar & Stephen McCaffrey & Daene McKinney, 2013. "Bridges Over Water:Understanding Transboundary Water Conflict, Negotiation and Cooperation," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 8634, February.
    2. Kim Hang Pham Do, 2014. "The Role of Issue Linkage in Managing the Mekong," WIDER Working Paper Series wp-2014-164, World Institute for Development Economic Research (UNU-WIDER).
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    Cited by:

    1. Abraham, Anand & Ramachandran, Parthasarathy, 2021. "The welfare implications of transboundary storage and dam ownership on river water trade," Mathematical Social Sciences, Elsevier, vol. 109(C), pages 18-27.

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    More about this item

    Keywords

    Trans-boundary river basin management; Institutional factors; Dams; Externalities; Welfare analysis; Conflict and cooperation;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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