Seeing beyond borders: a game theoretic approach to anticipate the effect of satellite monitoring data on transboundary freshwater allocation.

Abstract:

The allocation of transboundary freshwater resources is a ubiquitous challenge with direct repercussions on the political stability of the concerned region. Under the right conditions, the need to share scarce water resources can act as a catalyst for dialogue between otherwise hostile neighbors. Yet the strategic reluctance of the involved parties to share water diversion and use data remains a major barrier that raises the probability of conflict. In that context, high-quality satellite data are progressively available to monitor water resources beyond political boundaries. These datasets have an increasing role to play in the allocation of shared waters. We develop a game theoretical framework to predict their effect on transboundary water negotiations.

We consider repetitions of a game between two countries that have a water allocation agreement for transboundary river flow. The upstream country can observe the available flow in any given year and decide whether or not to provide her neighbor with the agreed upon river discharge. The downstream country cannot observe the initially available flow. He only observes the water allocated provided by his upstream neighbor and can take actions to impose a sanction on her if he can confidently determine that the agreement has been breached. In that context, satellite monitoring data will affect the informational advantage of the upstream country and increase her probability of either abiding by the agreement or being caught when breaching it. We find that the informed equilibrium will produce a lower probability of conflict, but changes in both players’ positions regarding equitable allocation may destabilize the existing agreement in the short term.