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Water scarcity has become a major constraint on economic development in many regions of the world and sectoral water reallocation is now widely recognized as an essential step toward the sustainable management of water resources. This paper offers an approach to the reallocation of water among sectors based on sequential sharing rules. An essential feature of this approach is that it takes jointly into account a multiplicity of aspects which are critical to many water reallocation problems, but have often been neglected by the theoretical literature. Such aspects include pre-existing customary (or other) rights, scarcity constraints, the chronological order of sectors’ arrivals and environmental water demand. In doing so, our framework can help achieve a solution which is not only more efficient, but also perceived as legitimate and fair. Sequential sharing rules can be used to support or complement other approaches to water allocation, including those based on water markets. Our framework is illustrated using an application to inter-sectoral water reallocation in Cyprus.

Reallocating Water: An Application of Sequential Sharing Rules to Cyprus