Sharing the Costs of Complex Water Projects: Application to the West Delta Water Conservation and Irrigation Rehabilitation Project, Egypt

Stefano Moretti, Fioravante Patrone, Ariel Dinar and Safwat Abdel-Dayem
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Stefano Moretti: CNRS UMR7243 and Laboratoire d’Analyse et Modélisation de Systèmes pour l’Aide à la Décision (LAMSADE), Paris-Dauphine University, Paris 75775, France
Fioravante Patrone: University of Genoa, Genoa 16126, Italy
Ariel Dinar: School of Public Policy, University of California, Riverside, CA 92506, USA
Safwat Abdel-Dayem: National Research Center, Cairo 12622, Egypt

Games, 2016, vol. 7, issue 3, 1-23

Abstract: Effective sharing mechanisms of joint costs among beneficiaries of a project are a fundamental requirement for the sustainability of the project. Projects that are heterogeneous both in terms of the landscape of the area under development or the participants (users) lead to a more complicated set of allocation mechanisms than homogeneous projects. The analysis presented in this paper uses cooperative game theory to develop schemes for sharing costs and revenues from a project involving various beneficiaries in an equitable and fair way. The proposed approach is applied to the West Delta irrigation project. It sketches a differential two-part tariff that reproduces the allocation of total project costs using the Shapley Value, a well-known cooperative game allocation solution. The proposed differential tariff, applied to each land section in the project reflecting their landscape-related costs, contrasts the unified tariff that was proposed using the traditional methods in the project planning documents.

Keywords: water project; cost allocation; cooperative game; Shapley Value; sustainability; stability; Egypt; West Delta (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2016
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