Conflict Resolution in Water Resources Management: Ronald Coase meets Vilfredo Pareto Peter Rogers Water as a Source for Conflict and Cooperation: Exploring the Potential Tufts University, 26-27 February 2004
Doctrines for Sharing Water 1. Absolute sovereignty over waters flowing within a country (preferred by upstream) 2.Riparian rights the river belong to its riparians (of interest to lower riparians) 3. River basin Optimization: Optimum development of the river basin (attractive to technical water planners because it gives them the option of considering the basin as single hydrological unit and plan accordingly)- not very tempting politically. 4. Equity and/or Fairness: Reasonable share or equitable use (respects the riparian's sovereign right within its territory, but restricts its uses to ensure reasonable shares for the other riparians). 5. Prior Appropriation: a framework applied in some parts of the United States giving first in time, first in right.
United Nations Convention on the Law of Non-Navigation Uses of International Watercourses Adopted May 1997with 35 signatures 37 articles Art. 2: Watercourse definition also included associated groundwaters Art. 5: Equitable and reasonable utilization and participation Art. 7: Obligation not to cause significant harm Art. 9: Regular exchange of data and information Art. 33: Settlement of disputes (vague)
PARETO ANALYSIS Vilfredo Pareto (1848-1923) was an Italian railway engineer turned economist who formulated a theorem that underpins much of modern welfare economics that there exists a set of solutions involving multiple persons, or groups, which can not be improved upon (make some one person better-off) without making some one worse off. A change that can make at least one individual better off, without making any other individual worse off is called a Pareto improvement, and when no further Pareto improvements can be made, Pareto efficient. Pareto, V., Manual of Political Economy, 1906.
COASE s THEOREM Coase, R.H., The Problem of Social Cost, Journal of Law and Economics, Vol. 3, No. 1 (Oct., 1960). Given well-defined property rights, low bargaining cost, perfect competition, and the absence of wealth and income effects, resources will be used efficiently and identically regardless of who owns them.
Important Analytic Concepts Pareto Admissibility Superfairness Game Theory Players Coalitions Strategies Payoffs Imputations Individual rationality Group rationality Existence of the core
Important Political Concepts Foreign policy linkages Image International law Other economic and social linkages Reciprocity Sovereignty Domestic policy linkages Bureaucratic policy formation Executive policy formation Non-executive policy formation Climate for agreement Common or shared technical perceptions Similar consumption of goods and services Similar industrial technologies Small number of countries Networking and contacts at trans-governmental levels Desire by one large country to have an agrement Development of a good in one country that may benefit others
Low Politics of Material Issues and High Politics of Diplomacy [O]ne should not expect basin-wide solutions to be effected while the larger issues of high politics remain contentious. It may be that cooperation in water utilization requires at the outset, the resolution of political conflict. M. Lowi, cited by B. Crow in, Bridge Over Troubled Waters, p. 5 in S. Devabhakutni, ed., Regional Cooperation in South Asia, Henry L. Stimson Center, Occasional Paper No. 32, Feb. 1997.
Ganges-Brahmaputra Basin
Analysis of Water Sharing Based upon a large river basin modeling study using mixed integer non-linear programming
Core The Ganges-Brahmaputra v(3)>23 8643 0 v(1)+v(2)>8265 Nepal (Rupees x10 6 /year) B C v(1)+v(3)>4409 A D Core v(2>2754 (Rupees x10 6 /year) Bangladesh v(2)+v(3)>3729 v(1)>4184 0 8643 India (Rupees x10 6 /year) 0 8643
Method India Bangladesh Nepal Reasonable and equitable sharing i) based on basin area 78.94 10.88 10.17 ii) based upon cultivated area 84.50 10.92 4.57 iii) based upon population 74.80 21.74 3.46 iv) based upon runoff 70.30 12.03 17.67 Grand Coalition 56.97 40.69 2.33 The Core I) max India II) max Bangladesh III) max Nepal The Nucleolus I) nucleolus II) per capita nucleolus Shapley Value Shapley value 56.85 50.74 56.85 52.77 53.11 42.87 48.98 38.77 44.90 45.24 0.26 0.26 4.37 2.31 1.63 54.17 41.96 3.86
New Forms of Cooperation In negotiations between India and Nepal and between India and Bhutan have pioneered new ground by: Establishing processes for international development, rather than agreement on fixed terms, and these processes involve a redrawing of the bounds of diplomacy, and national sovereignty, mostly to shift negotiations from the diplomatic to the economic sphere; These processes involve the sharing of eventual benefits and costs, rather than fixed royalties or rents based upon anticipated outcomes; Third parties other than governments are brought into the processes of international negotiation design and implementation. Source. B. Crow, Bridge Over Troubled Waters, p. 5 in S. Devabhakutni, ed., Regional Cooperation in South Asia, Henry L. Stimson Center, Occasional Paper No. 32, Feb. 1997.
Analysis Based upon Regional Resources Development (Riccardo Model) Model is expanded to include trade and transit of all major resource commodities (electricity, gas, oil, coal, agr. products) and the usual water supply, irrigation, flood control, salinity control, and environmental flows. Uses the original water model as the basis. Much more likely to find significant benefits for all the participants.
Representation at each Node At each node in the model a detailed demand supply balance is computed for all the commodities at the same time allowing local energy sources to transform between electricity fuels, and the local production of other commodities for local demand or for export.
This leads to a complicated Riccardian optimizing model which can be used to derive the benefits for the Pareto Solution and to examine the payoffs to the various coalitions. Could help the bargaining over benefit sharing.
Typical Results Six region model North India East India North East India Nepal Bangladesh Rest of the World (ROW)
To bring Low Politics and High Politics together we need to develop reliable tools to inform the Coasian solutions to transboundary water conflicts