Chapter

Advances in Dynamic Game Theory

Volume 9 of the series Annals of the International Society of Dynamic Games pp 393-410

Time-Consistent Fair Water Sharing Agreements

  • Rodney BeardAffiliated withSchool of Economics and the ARC Centre for Complex Systems, The University of Queensland
  • , Stuart McDonaldAffiliated withSchool of Economics and the ARC Centre for Complex Systems, The University of Queensland

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Abstract

Scarcity of water has become a major issue facing many nations around the world. To improve the efficiency of water usage there has been considerable interest in recent years in trading water. A major issue in trading water rights is the problem of how an allocation system can be designed in perpetuity that also has desirable properties at each point of time. This is an issue of the time consistency of the contract to trade water. In this chapter we develop a model of dynamic recontracting of water rights and study time consistency properties of the resultant contracts using the ideas of Filar and Petrosjan [7].

Key words

Dynamic cooperative games water sharing agreements time consistency of contracts