Water diversions in the great lakes basin analyzed in a game theory framework

Water diversions from the great lakes is a complex problem because the five lakes are a common property resource, since hydropower production and commercial navigation are a function oflakes level.Game theory is used to analyze the dependency among eight states and two provinces. The decisions concerning water diversion affect the state of the system in future periods and several scenarios with different restrictions on the lakes where diversions can be carried. This was done with respect to a one player (Social planner), two players (U.S.versus Canada) and independent actions taken by states and provinces which can sum up to ten players.The results suggests that states do not divert water necessarily because they stand to gain but because they may lose more if they do not. This is a situation not unlike the prisoner's dilemma case.