Beard, Rodney (2011): The river sharing problem: A review of the technical literature for policy economists.

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Abstract
Water is essential for life. However, the basic problem of water resource allocation has been that water tends to be overallocated. Demand for water exceeds the available supply. Essentially, the water economy is bankrupt. Bankruptcy problems have been almost exhaustively studied in the literature on economic theoryprimarily from the perspective of cooperative game theory. The main concern of this literature has been how to fairly divide up the assets of a bankrupt entity. In water resource economics cooperative game theory has often been employed as a means of analyzing water resource allocation. It was only recently that the problem of directional flow was incorporated into such analyses. This has come to be known as the “river sharing problem” in the theoretical literature. Accounting for the direction of flow in water resource allocation problems has profound implications for policies that wish to facilitate both fair and efficient water allocations. This is the case whether proposed policies are interventionist or market based in nature. There is now a considerable literature on the allocation and distribution of water resources characterized by unidirectional flow. In this paper I critically review and appraise this literature with a view to making it more accessible to applied and policy economists. A key feature of the paper is that the connection between the bankruptcy literature, which has recently also realized the importance of flow, and the river sharing literature is discussed. The current state of the art in game theoretic models of water resource allocation with directional flow is discussed and implications and consequences for water resource policy highlighted
Item Type:  MPRA Paper 

Original Title:  The river sharing problem: A review of the technical literature for policy economists 
Language:  English 
Keywords:  River sharing problem, Bankruptcy, Cooperative game theory, Water resouyrce allocation, distributive justice 
Subjects:  D  Microeconomics > D6  Welfare Economics > D63  Equity, Justice, Inequality, and Other Normative Criteria and Measurement C  Mathematical and Quantitative Methods > C7  Game Theory and Bargaining Theory > C71  Cooperative Games B  History of Economic Thought, Methodology, and Heterodox Approaches > B2  History of Economic Thought since 1925 > B23  Econometrics ; Quantitative and Mathematical Studies Q  Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2  Renewable Resources and Conservation > Q25  Water 
Item ID:  34382 
Depositing User:  Rodney Beard 
Date Deposited:  28. Oct 2011 22:27 
Last Modified:  07. Oct 2015 13:09 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/34382 