Incentive Compatibility and Conflict Resolution in International River Basins : A Case Study of the Nile Basin

Nation-states rarely go to war over water, but it is equally rare that water conflicts in an international river basin are resolved through cooperation among the riparian countries that use the shared resources. Gains from cooperation will mean little to individual riparians unless the required cooperative behaviors are incentive-compatible. Cooperative game theory offers useful insights for assessing cooperative solutions for water conflicts in international river basins. Applying cooperative game theory concepts such as core, nucleolus, and Shapley value to Nile water conflicts, we examine the incentive structure of both cooperative and noncooperative strategies for different riparian countries and establish some baseline conditions for incentive-compatible cooperation in the Nile basin