Fair allocation of riparian water rights

TL;DR

This paper develops an axiomatic framework for fair riparian water rights allocation, linking it to cooperative game theory and applying it to the Nile River case.

Contribution

It formalizes ethical principles as axioms, characterizes allocation rules, and connects them to the Shapley value and territorial principles.

Findings

Characterizes allocation rules using axioms.

Links rules to the Shapley value.

Applies framework to Nile River water rights.

Abstract

We take an axiomatic approach to the allocation of riparian water rights. We formalize ethical or structural properties as axioms of allocation rules. We show that several combinations of these axioms characterize focal rules implementing the principle of Territorial Integration of all Basin States in various forms. One of them connects to the Shapley value, the long-standing centerpiece of cooperative game theory. The others offer natural compromises between the polar principles of Absolute Territorial Sovereignty and Unlimited Territorial Integrity. We complete our study with an empirical application to the allocation of riparian water rights in the Nile River.