Water Allocation Using the Bankruptcy Model: A Case Study of the Missouri River

Abstract

This research applies cooperative game theory—specifically, the bankruptcy model—to address conflicts arising from the scarcity of water resources shared by multiple agents. This case study addresses potential outcomes of five allocation rules applied to the apportionment of water between two agents in the Missouri River. Currently, there is no interstate compact to apportion Missouri River and frequent disputes between upstream and downstream states occur. Upstream states favor managing reservoir water levels to support reservoir recreation and downstream states want water for the downstream navigation channel. The five allocation rules studied are (1) Proportional Sharing, (2) Constrained Equal Awards, (3) Constrained Equal Losses, (4) Sequential Sharing based on Proportional Sharing, and (5) a proposed Modified Constrained Equal Awards rule. The results of the analysis of apportionment during four dry years in the 2000s show that the best approaches are the proposed Modified Constrained Equal Awards Rule and the Proportional Sharing Rule.