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Optimal institutional arrangements for the management of Transboundary water resources


The development and evaluation of alternative institutional arrangements for managing international water resources must be at the top of any research list as nearly two thirds of the world's trans-boundary water resources still lack any type of co-operative management framework. With respect to economic research on transboundary water resources the need for analysing arrangements by (1) integrating beside water quantity also aspects of water quality, (2) integrating efficiency aspects and including organisational transaction costs, and (3) considering the stochastic nature of water resources have to be stated. The proposed project aims to address these desiderata by applying in a first step econometric tools to quantify such transaction costs. These are then linked to (stochastic) models of quantitative efficiency analysis. Results (cost as well as efficiency estimates) should be integrated into the players' pay-off matrixes of models based on (stochastic) coalitional game theory. To adequately model the stochastic resource conditions Bayesian estimation techniques will be tested with respect to the efficiency models and the modelling of transaction costs. With respect to possible data limitations adequate simulation and sample generation tools (bootstrapping etc.) should be used. Finally the need for interdisciplinary modelling should be considered by linking GIS-based variables and relations to the socioeconomic models of costs and efficiency. Throughout the modelling efforts strict adherence to the underlying implications of microeconomic theory with respect to theoretical consistency, functional flexibility and form should be assured. The proposed project aims at combining different state-of-the-art methodological tools, considers interdisciplinary modelling possibilities and applies the resulting framework to a high ranked topic on the international political agenda: the design of efficient and stable international environmental agreements (IEA).

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