SHARING TRANSBOUNDARY RIVERS FAIRLY ANDEFFICIENTLY

This paper provides an analytical framework for exploring the relationshipbetween equity and efficiency for two riparians sharing a transboundary river.Decreasing marginal productivities of water make a noncooperative approach inefficientwhen water is scarce. If the upstream riparian uses its optimal quantitythe downstream riparian suffers disproportionately. The undesirable propertiescan be avoided by means of a cooperative agreement in which the two ripariansshare the water equally. Equal quota is at least as efficient as noncooperationwhen riparians are identical or when the downstream riparian is relatively costeffectiveand generates a cooperative surplus when water is sufficiently scarce...