Problems and Prospects in the Political Economy of Trans-Boundary Water Issues

The objective of this research was to develop and apply a conceptual framework for evaluating the potential of trans-boundary bargaining with respect to water resource sharing. The research accomplished this objective by developing a framework for trans-boundary bargaining, identifying opportunities for application, and illustrating the potential benefits that can be gained thereby. Specifically, we have accomplished the following: - Developed a framework to measure the potential for improving economic efficiency considering issues of political feasibility and sustainability that are crucial in trans-boundary cooperation. - Used both cooperative and non-cooperative game theory to assess feasible coalitions among the parties involved and to model potential bargaining procedures. - Identified empirically alternative schemes of cooperation that both improve upon the economic efficiency of present water usage and appease all of the cooperating parties. - Estimated the potential short-run and long-run affects of water reallocation on the agricultural sector and used this information to understand potential strategies taken by the countries in bargaining processes. - Performed case studies in Israeli-Jordanian relations, the relationship of Israel to the Palestinian Authority, and cooperation on the Chesapeake Bay. - Published or have in process publication of a series of refereed journal articles. - Published a book which first develops the theoretical framework, then presents research results relating to the case studies, and finally draws implications for water cooperation issues generally. Background to the Topic The increase in water scarcity and decline in water quality that has resulted from increased agricultural, industrial, and urban demands raises questions regarding profitability of the agricultural sector under its present structure. The lack of efficient management has been underscored recently by consecutive years of drought in Israel and increased needs to clean up the Chesapeake Bay. Since agriculture in the Middle East (Chesapeake Bay) is both the main water user (polluter) and the low-value user (polluter), a reallocation of water use (pollution rights) away from agriculture is likely with further industrial and urban growth. Furthermore, the trans-boundary nature of water resources in the case of the Middle East and the Chesapeake Bay contributes to increased conflicts over the use of the resources and therefore requires a political economic approach. Major Conclusions, Solutions, Achievements and Implications Using game theory tools, we critically identify obstacles to cooperation. We identify potential gains from coordination on trans-boundary water policies and projects. We identify the conditions under which partial (versus grand) coalitions dominate in solving water quality disputes among riparian countries. We identify conditions under which linking water issues to unrelated disputes achieves gains in trans-boundary negotiations. We show that gains are likely only when unrelated issues satisfy certain characteristics. We find conditions for efficient water markets under price-determined and quantity-determined markets. We find water recycling and adoption of new technologies such as desalination can be part of the solution for alleviating water shortages locally and regionally but that timing is likely to be different than anticipated. These results have been disseminated through a wide variety of publications and oral presentations as well as through interaction with policymakers in both countries.