A Bilateral River Bargaining Problem with Negative Externality

TL;DR

This paper models a bilateral river sharing problem with negative externalities using market-based bargaining, highlighting issues of inequity and proposing a framework for negotiated treaties based on international principles.

Contribution

It introduces a market-based bargaining model for river sharing with negative externalities, incorporating international principles and addressing inequity in negotiations.

Findings

Market-based bargaining effectively models river sharing disputes.

International principles may lead to inequitable outcomes.

Negotiated treaties can mitigate externality impacts.

Abstract

This article is addressing the problem of river sharing between two agents along a river in the presence of negative externalities. Where, each agent claims river water based on the hydrological characteristics of the territories. The claims can be characterized by some international framework (principles) of entitlement. These international principles are appears to be inequitable by the other agents in the presence of negative externalities. The negotiated treaties address sharing water along with the issue of negative externalities imposed by the upstream agent on the downstream agents. The market based bargaining mechanism is used for modeling and for characterization of agreement points.