Flexible Water Sharing within an International River Basin

D. Kilgour and Ariel Dinar

Environmental & Resource Economics, 2001, vol. 18, issue 1, 43-60

Abstract: Increasing scarcity of water resources, and greatervariability in available water supply, are causingacute difficulties for allocation agreements amongusers of water bodies. One cause of controversy,especially for river waters, is the inability of mostallocation operations to accommodate variations inconditions. In this paper we develop a flexiblemechanism that produces a Pareto-efficient allocationfor every possible flow volume in a river. Extensionsto accommodate other kinds of variation, such as waterdemand, are feasible. The mechanism is demonstratedusing historical water flow data for the Ganges, basedon stylized water demand relationships for India andBangladesh. Quantitative comparison between fixed andvariable allocation suggests that variable allocationsubstantially outperforms fixed allocation, improvingregional welfare by at least ten percent. Copyright Kluwer Academic Publishers 2001

Date: 2001
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DOI: 10.1023/A:1011100130736

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