TRANSBOUNDARY WATER MANAGEMENT: CAN ISSUE LINKAGE HELP MITIGATE EXTERNALITIES?

Managing transboundary river basins is never easy and usually involves conflicts. This paper introduces a special class of games with externalities and issue linkage to promote cooperation on transboundary water resources. The paper analyzes whether issue linkages can be used as a form of negotiations on sharing benefits and mitigating conflicts. It is shown that whenever opportunities for linkages exist, countries may indeed contribute towards cooperation. In particular, if the linked games are convex, the grand coalition is the only optimal level of social welfare.