Incorporating Economic and Political Considerations in Inter-Basin Water Allocations: A Case Study

When an inter-basin water transfer is expected among basins with some level of unfriendliness or hostility, ignoring political considerations, which are generally not integrated in economic investigations, can impede an integrated and efficient management. In this paper, a new economic-political methodology is proposed for the optimal and efficient allocation of water resources among water users in inter-basin water transfer systems. The proposed framework quantifies both the economic payoffs using an “n-person real fuzzy cooperative game”, and the political formation prospect of any coalition, using a Modified Political Accounting System (MPAS). The proposed economic-political methodology is applied to a large scale inter-basin water allocation problem including water donor and receiving basins struggling with water scarcity. The results show how including political considerations in the study may provide a more satisfactory solution compared to the just cost-effective water allocations.