Skip to main content

Sources of Mistrust: An Experimental Case Study of a Central Asian Water Conflict

Abstract

With the disintegration of the USSR a conflict arose between Kyrgyzstan, Uzbekistan and Kazakhstan over the transboundary Syr Darya river. Upstream Kyrgyzstan controls the Toktogul reservoir which generates hydropower demanded mainly in winter for heating. Downstream Uzbekistan and Kazakhstan need irrigation water in summer, primarily to grow an export crop (cotton). Regional agreements obliging Kyrgyzstan to higher summer discharges in exchange for fossil fuel transfers from downstream riparians in winter have been unsuccessful, due to lack of trust between the parties. Striving for self-sufficiency in irrigation water, Uzbekistan initiated new reservoir construction. This paper examines their economic impact. We report a laboratory experiment modelling the Syr Darya scenario as a multi-round, three-player trust game with non-binding contracts. Payoff schemes are estimated using real-life data. While basinwide efficiency maximisation requires regional cooperation, our results demonstrate that cooperation in the laboratory is hard to achieve. Uzbek reservoirs improve cooperation only weakly and their positive impact is limited to low-water years.

References

  • Abbink K, Sadrieh A (1995) RatImage—research assistance toolbox for computer-aided human behavior experiments. SFB Discussion Paper B-325, University of Bonn

  • Abbink K, Irlenbusch B, Rockenbach B, Sadrieh A, Selten R (2002) The behavioural approach to the strategic analysis of spectrum auctions: the case of the German DCS-1800 auction. ifo Studien 48: 457–480

    Google Scholar 

  • Abbink K, Jayne T, Moller L (2008) The relevance of a rules-based maize marketing policy: an experimental case study of Zambia, World Bank Policy Research Working Paper 4727

  • Ambec S, Doucet J (2003) Decentralising hydro power production. Can J Econ 36: 587–607

    Article  Google Scholar 

  • Ambec S, Sprumont Y (2002) Sharing a river. J Econ Theory 107: 453–462

    Article  Google Scholar 

  • Antipova E, Zyranov A, Mckinney D, Savitsky A (2002) Optimisation of Syr Darya water and energy uses. Water Int 27: 504–516

    Article  Google Scholar 

  • Aytemiz L (2001) The optimal joint provision of water for irrigation and hydropower in the Euphrates river: the case of conflict between Turkey and Syria’, Ph.D. Dissertation, Oklahoma State University

  • Barrett S (1994) Conflict and cooperation in managing international water resources. World Bank Policy Research Working Paper 1303, Washington, DC

  • Berg J, Dickhaut J, McCabe K (1995) Trust, reciprocity and social history. Games Econ Behav 10: 122–142

    Article  Google Scholar 

  • Brandts J, Saijo T, Schram A (2004) How universal is behavior? A four country comparison of spite and cooperation in voluntary contribution mechanisms. Pub Choice 119: 381–424

    Article  Google Scholar 

  • Cameron L, Chaudhuri A, Erkal N, Gangadharan L (2005) Do attitudes towards corruption differ across cultures? Experimental evidence from Australia, India, Indonesia and Singapore. University of Melbourne, Mimeo

  • Chatterjee B, Howitt R, Sexton R (1998) The optimal joint provision of water for irrigation and hydropower. J Environ Econ Manage 36: 295–313

    Article  Google Scholar 

  • Cox J, Sadiraj K, Sadiraj V (2008) Implications of trust, fear and reciprocity for modeling economic behavior. Exp Econ 11: 1–24

    Article  Google Scholar 

  • Dinar A, Wolf A (1994) International markets for water and the potential for regional cooperation: economic and political perspectives in the western Middle East. Econ Dev Cult Change 43: 43–66

    Article  Google Scholar 

  • Dufwenberg M, Gneezy U (2000) Measuring beliefs in an experimental lost wallet game. Games Econ Behav 30: 163–182

    Article  Google Scholar 

  • Economist Intelligence Unit (2004) Uzbekistan country profile 2004, London, New York and Hong Kong

  • Fehr E, Kirchsteiger G, Riedl A (1993) Does fairness prevent market clearing? An experimental investigation. Q J Econ 108: 437–459

    Article  Google Scholar 

  • Fershtman C, Gneezy U (2001) Discrimination in a segmented society: an experimental approach. Q J Econ 116: 351–377

    Article  Google Scholar 

  • Gächter S, Falk A (2002) Reputation and reciprocity: consequences for the labour relation. Scand J Econ 104: 1–26

    Article  Google Scholar 

  • Gisser M, Lansford R, Gorman W, Creel B, Evans M (1979) Water trade-offs between electric energy and agriculture in the four corner areas. Water Resour Res 21: 529–538

    Article  Google Scholar 

  • Güth W, Kröger S, Maug E (2008) You may have to do it again, Rocky!—an experimental analysis of bargaining with risky joint profits. New Zealand Economic Papers, forthcoming

  • Hamilton J, Whittlesey N, Halverson P (1989) Interruptible water markets in the Pacific Northwest. Am J Agric Econ 71: 63–75

    Article  Google Scholar 

  • Herrmann B, Gächter S, Thöni C (2008) Antisocial punishment across societies. Science 319: 1362–1367

    Article  Google Scholar 

  • Houston J, Whittlesey N (1986) Modelling agricultural water markets for hydropower in the Pacific Northwest. West J Agric Econ 11: 221–232

    Google Scholar 

  • International Monetary Fund (2008) Republic of Uzbekistan: 2008 article IV consultation—staff report, Washington, DC

  • IPPC (Intergovernmental Panel on Climate Change) (2001) Climate change 2001: IPCC third assessment report, http://www.grida.no/climate/ipcc_tar/

  • Irlenbusch B (2005a) Relying on a man’s word? An experiment on non-binding contracts, Int Rev Law Econ, forthcoming

  • Irlenbusch B (2005b) Are non-binding contracts really not worth the paper? Manage Decis Econ, forthcoming

  • Khagram S (2004) Dams and development—transnational struggles for water and power. Cornell University Press, Itacha

    Google Scholar 

  • Kilgour D, Dinar A (2001) Flexible water sharing within an international river basin. Environ Resour Econ 18: 43–60

    Article  Google Scholar 

  • Linn J, Moller L, Kenny S (2005) The natural resource lifeline for Central Asia: water, energy and the environment, chapter 4 in United Nations Development Program (UNDP), Central Asia human development report—bringing down barriers: regional cooperation for human development and human security, Bratislava

  • McCarl B, Parandvash G (1988) Irrigation development versus hydropower generation: can interruptible irrigation play a role?. West J Agric Econ 13: 267–276

    Google Scholar 

  • McCarl B, Ross M (1985) The costs borne by electricity consumers under expanded irrigation from the Columbia River. Water Resour Res 15: 233–239

    Google Scholar 

  • Moller L (2004) Sharing transboundary rivers fairly and efficiently, discussion papers in economics 04/02, University of Nottingham

  • Moller L (2005a) Transboundary water conflicts over hydropower and irrigation: can multinational development banks help? CREDIT research paper 05/09, University of Nottingham

  • Moller L (2005b) Sharing transboundary rivers, Ph.D Thesis, University of Nottingham

  • O’Hara S (2000a) Central Asia’s water resources: contemporary and future management issues. Water Resour Dev 16: 423–441

    Article  Google Scholar 

  • O’Hara S (2000b) Lessons from the past: water management in Central Asia. Water Policy 2: 365–384

    Article  Google Scholar 

  • Owen-Thomsen K, Alercon L, Marks D (1982) Agriculture vs. hydropower trade-offs in the operation of the high Aswan Dam. Water Resour Res 18: 1605–1613

    Article  Google Scholar 

  • Rogers P (1997) International river basins: pervasive unidirectional externalities. In: Dasgupta P, Mäler K, Vercelli A (eds) The economics of transnational commons. Clarendon Press, Oxford

    Google Scholar 

  • Roth A, Prasnikar V, Okuno-Fujiwara M, Zamir S (1991) Bargaining and market behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo. Am Econ Rev 81: 1068–1095

    Google Scholar 

  • Selten R (1965) Spieltheoretische Behandlung eines Oligopolmodells mit Nachfrageträgheit. Zeitschrift für die gesamte Staatswissenschaft 121: 301–324

    Google Scholar 

  • Selten R (1975) Reexamination of the perfectness concept for equilibrium points in extensive games. Int J Game Theory 4: 25–55

    Article  Google Scholar 

  • SPECA (2004) Cooperation strategy to promote the rational and efficient use of water and energy resources in Central Asia, United Nations Special Programme for the Economies of Central Asia (SPECA)

  • US Department of Agriculture (2004) http://www.fas.usda.gov

  • World Bank (2004a) Water and energy nexus in Central Asia: improving regional cooperation in the Syr Darya Basin, Europe and Central Asia Region, Washington, DC

  • World Bank (2004b) Central Asia regional electricity export potential study, Europe and Central Asia Region, Washington, DC

  • World Bank (2004c) Improved water management in the Aral Sea Basin—summary of strategic directions, Europe and Central Asia Region, Washington, DC (mimeo)

  • World Bank (2004d) World development indicators, www.worldbank.org/data/wdi2004

  • World Bank (2004e) Uzbekistan at a Glance, http://www.worldbank.org/data/countrydata/aag/uzb_aag.pdf

Download references

Open Access

This article is distributed under the terms of the Creative Commons Attribution Noncommercial License which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Klaus Abbink.

Additional information

Disclaimer The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Rights and permissions

Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (https://creativecommons.org/licenses/by-nc/2.0), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.

Reprints and Permissions

About this article

Cite this article

Abbink, K., Moller, L.C. & O’Hara, S. Sources of Mistrust: An Experimental Case Study of a Central Asian Water Conflict. Environ Resource Econ 45, 283–318 (2010). https://doi.org/10.1007/s10640-009-9316-2

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10640-009-9316-2

Keywords

  • Central Asia
  • Common-pool resources
  • Dams
  • Hydropower
  • Irrigation
  • Experimental economics
  • Regional public goods
  • Syr Darya
  • Trust games
  • Water

JEL Classification

  • C72
  • C92
  • O53
  • Q25