Game theory and water resources

Abstract

Managing water resources systems usually involves conflicts. Behaviors of stakeholders, who might be willing to contribute to improvements and reach a win-win situation, sometimes result in worse conditions for all parties. Game theory can identify and interpret the behaviors of parties to water resource problems and describe how interactions of different parties who give priority to their own objectives, rather than system's objective, result in a system's evolution. Outcomes predicted by game theory often differ from results suggested by optimization methods which assume all parties are willing to act towards the best system-wide outcome. This study reviews applicability of game theory to water resources management and conflict resolution through a series of non-cooperative water resource games. The paper illustrates the dynamic structure of water resource problems and the importance of considering the game's evolution path while studying such problems. © 2009 Elsevier B.V. All rights reserved.