Sustainable Agreements on Stochastic River Flow

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Many river sharing agreements in transboundary river basins are inherently unstable. Due to stochastic river flow, agreements may be broken in case of drought. The objective of this paper is to analyze whether river sharing agreements can be self-enforcing, or sustainable. We do so using an infinitely-repeated sequential game that we apply to several classes of agreements. To derive our main results we apply the equilibrium concepts of subgame-perfect equilibrium and renegotiation-proof equilibrium to the river sharing problem. We show that, given the upstream-downstream asymmetry, sustainable agreements allow downstream agents to reap the larger share of the benefits of cooperation.
Original languageEnglish
Pages (from-to)92-117
JournalResource and Energy Economics
Volume44
DOIs
Publication statusPublished - 2016

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Sequential game
Transboundary
Drought
River basin
Subgame perfect equilibrium
Asymmetry
Renegotiation

Cite this

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title = "Sustainable Agreements on Stochastic River Flow",
abstract = "Many river sharing agreements in transboundary river basins are inherently unstable. Due to stochastic river flow, agreements may be broken in case of drought. The objective of this paper is to analyze whether river sharing agreements can be self-enforcing, or sustainable. We do so using an infinitely-repeated sequential game that we apply to several classes of agreements. To derive our main results we apply the equilibrium concepts of subgame-perfect equilibrium and renegotiation-proof equilibrium to the river sharing problem. We show that, given the upstream-downstream asymmetry, sustainable agreements allow downstream agents to reap the larger share of the benefits of cooperation.",
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Sustainable Agreements on Stochastic River Flow. / Ansink, E.; Houba, H.E.D.

In: Resource and Energy Economics, Vol. 44, 2016, p. 92-117.

Research output: Contribution to JournalArticleAcademicpeer-review

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AU - Houba, H.E.D.

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AB - Many river sharing agreements in transboundary river basins are inherently unstable. Due to stochastic river flow, agreements may be broken in case of drought. The objective of this paper is to analyze whether river sharing agreements can be self-enforcing, or sustainable. We do so using an infinitely-repeated sequential game that we apply to several classes of agreements. To derive our main results we apply the equilibrium concepts of subgame-perfect equilibrium and renegotiation-proof equilibrium to the river sharing problem. We show that, given the upstream-downstream asymmetry, sustainable agreements allow downstream agents to reap the larger share of the benefits of cooperation.

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SN - 0928-7655

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