Author(s)

S. Wei & A. Gnauck

Abstract

Water quality degradation and water scarcity are two serious problems in developing countries. Water management related to these problems usually involves multi-stakeholders with contradictory interests. In the absence of market and exclusive property rights, conflicts among those multi-stakeholders are unavoidable. Game theory can be an appropriate approach to simulate and resolve such conflicts. In this paper, the conflicts of multiple water stakeholders involved in water management of the Hanjiang River Basin in China are modelled as non-cooperative and cooperative games. Statistical and econometric regression models are used to formulate the payoff functions of different players. Cost-benefit analysis (CBA) and the demand-supply principle (DSP) are applied to compare the game outcomes. The results of the game simulations show that cooperation can make all the players better off, although some players may be worse off before the benefit is shared among the players by side payment. The results are not only a comparison of the different water stakeholders, but also benefit water administration for decision support. Keywords: water management, game theory, Hanjiang River, modelling and simulation, cost-benefit analysis. 1 Introduction Water is essential for the existence of human and other species. However, water quality degradation and water scarcity are two serious problems in developing countries. It is estimated that in 2025, 5 billion out of the world’s 7.9 billion people will be living in areas where it will be difficult or even impossible to meet

Keywords

water management, game theory, Hanjiang River, modelling and simulation, cost-benefit analysis.