A bargaining model for sharing water in a river with negative externality

Patel, SS and Ramachandran, P (2022) A bargaining model for sharing water in a river with negative externality. In: OPSEARCH, 59 (2). 645 -666.

PDF OPSEARCH_59-2_645-666_2022.pdf - Published Version Restricted to Registered users only Download (1MB) | Request a copy

Abstract

This article is focused on the problem of river sharing in the presence of pollution as a negative externality between two riparian states (agents). In this paper, a market-based contract mechanism is presented; it can address the issue of negative externality imposed by an upstream agent on the downstream agents while sharing a river. The proposed mechanism incorporates a penalty for pollution and also incentives for trading water between upstream and downstream agent. The mechanism introduces a new concept of negative water as penalty against pollution for an upstream agent in a contract for water sharing. The contract is analyzed by a market-based bargaining model to determine a negotiated treaty between the upstream agent and the downstream agent. The results show the characterization of agents with regard to agreement points for negotiated treaty. Also, it shows that an equilibrium exists for a unique solution that makes both the agents better off. The model discussed in this paper can be easily applied to any transboundary river conflict where pollution plays an important role.

Item Type:	Journal Article
Publication:	OPSEARCH
Publisher:	Springer
Additional Information:	The copyright for this article belongs to the Springer.
Keywords:	Bargaining; Negative externality; River sharing problem
Department/Centre:	Division of Physical & Mathematical Sciences > Instrumentation Appiled Physics
Date Deposited:	03 Dec 2021 07:02
Last Modified:	11 Sep 2022 05:23
URI:	https://eprints.iisc.ac.in/id/eprint/70110

Actions (login required)

View Item