Simulating water conflicts using game theoretical models for water resources management

Abstract

Water quality degradation and water scarcity are two serious problems in developing countries. Water management related to these problems usually involves multi-stakeholders with contradictory interests. In the absence of market and exclusive property rights, conflicts among those multi-stakeholders are unavoidable. Game theory can be an appropriate approach to simulate and resolve such conflicts. In this paper, the conflicts of multiple water stakeholders involved in water management of the Hanjiang River Basin in China are modelled as non-cooperative and cooperative games. Statistical and econometric regression models are used to formulate the payoff functions of different players. Cost-benefit analysis (CBA) and the demand-supply principle (DSP) are applied to compare the game outcomes. The results of the game simulations show that cooperation can make all the players better off, although some players may be worse off before the benefit is shared among the players by side payment. The results are not only a comparison of the different water stakeholders, but also benefit water administration for decision support.