An Ultimatum Game Theory Based Approach for Basin Scale Water Allocation Conflict Resolution

Ershad Oftadeh, Mojtaba Shourian () and Bahram Saghafian
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Ershad Oftadeh: Islamic Azad University
Mojtaba Shourian: Shahid Beheshti University
Bahram Saghafian: Islamic Azad University

Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), 2017, vol. 31, issue 13, No 16, 4293-4308

Abstract: Abstract Increasing water consumption via competitive demands has resulted in serious water conflicts and the subsequent environmental crisis in the Gavkhouni Watershed with the Gavkhouni swamp in the most downstream located in the central part of Iran. In this research, a two-player ultimatum game theory approach is adopted to not only address the water conflicts with the purpose of environmental reclamation of the drying swamp, but also to ensure economic satisfaction for the upstream landowners and farmers. The Ministry of Energy (MoE) and its subsidiary regional water authority represent the responsible organizations for providing water while the Ministry of Agriculture (MoA) is the primary body in charge of water consumption in the watershed. MoE and MoA are considered as two players in the game, whereas MoE has more power than MoA in terms of allocating water. Five strategies are studied namely: 1 and 2) decreasing water allocation to irrigated agriculture as much as the annual shortage of the Gavkhouni swamp with and without compensation to MoA (D-L), 3 and 4) decreasing water allocation to irrigated agriculture twice as much the annual shortage of the swamp with and without compensation for MoA (D-2 L) and 5) giving up Gavkhouni swamp’s reclamation plan (D). Moreover, three scenarios regarding the relations between environmental and agricultural utilities are designated. According to the results, D-2 L with paying compensation to MoA is chosen as the best alternative in scenario 1 when the environmental utility was assumed to be greater than the agricultural utility. Ultimatum Game Theory has no final solution for scenarios 2 and 3 where the environmental utility is considered to be equal and smaller than agricultural utility. The swamp’s annual environmental water shortage as 324 million cubic meters is supplied by application of both strategies D-L and D-2 L. Ultimatum Games are efficient in assessment of water conflicts to resolve them through careful and planned negotiations.

Keywords: Conflict resolution strategies; Water allocation; Ultimatum game theory; Gavkhouni swamp (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s11269-017-1746-y

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