Negotiating on water: insights from non-cooperative bargaining theory

Carlo Carraro (), Carmen Marchiori and Alessandra Sgobbi

Environment and Development Economics, 2007, vol. 12, issue 2, 329-349

Abstract: The purpose of this paper is to review the applications of non-cooperative bargaining theory to water management problems. The interest in this subject stems from two considerations: (i) water resources continue to be mismanaged, despite their recognized importance for sustainable development, in particular in developing countries; (ii) negotiated decision making has the potential to improve water management, yet there is still little formal understanding of the forces driving bargaining processes, and applications of formal negotiation theory to water issues are also lacking. This paper surveys the existing non-cooperative bargaining models applied to water management problems, with the purpose of preliminarily assessing whether such a formal approach in the phase of problem exploration and policy formulation can support decision makers in the real world. It is the contention of this paper that the proposed approach may offer direct and indirect support by: shortening the time needed to reach an agreement through the (theoretical) identification of an ‘acceptability space’, and helping select policies which are self-enforcing and, therefore, acceptable.

Date: 2007
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