Flexible water sharing within an international river basin

Abstract

Increasing scarcity of water resources, and greater variability in available water supply, are causing acute difficulties for allocation agreements among users of water bodies. One cause of controversy, especially for river waters, is the inability of most allocation operations to accommodate variations in conditions. In this paper we develop a flexible mechanism that produces a Pareto-efficient allocation for every possible flow volume in a river. Extensions to accommodate other kinds of variation, such as water demand, are feasible. The mechanism is demonstrated using historical water flow data for the Ganges, based on stylized water demand relationships for India and Bangladesh. Quantitative comparison between fixed and variable allocation suggests that variable allocation substantially outperforms fixed allocation, improving regional welfare by at least ten percent.