Transboundary water allocation in critical scarcity conditions: a stochastic bankruptcy approach

Abstract

Abstract A common problem in water resource allocation is to design a stable and feasible mechanism of water sharing in critical scarcity conditions. The task becomes very challenging when the water demand exceeds the available water resources reserves. To address this pervasive allocation problem related to transboundary rivers, the bankruptcy method is used. The bankruptcy method distributes water among riparian states when their total demand exceeds the total available water. This paper describes a new methodology for the allocation of scarce water resources in a complex system using a stochastic game theory which is an extension of bankruptcy theory. The authors have also proposed ‘weighted bankruptcy’ approach that can be used under a stochastic setting. The weighted bankruptcy approach favors agents with ‘high agricultural productivity’. The bankruptcy rules have been applied in the water resource system in four critical scarcity scenarios. The available water is allocated under the simple and weighted bankruptcy rules. The results showed that under all four scenarios, the weighted bankruptcy rules favor the agents which have a high agricultural productivity. The stochastic bankruptcy approach under the simple and the weighted bankruptcy rules can provide important strategic information for better management and sustainable sharing of water resources.