Damming Trans-Boundary Rivers: A Welfare Analysis of Conflict and Cooperation

Abstract

Dams are essential for water storage and hydropower generation, but change river flow patterns and endanger local environments. Dam projects may further exacerbate already existing problems in trans-boundary rivers. We consider three scenarios of institutional factors: (1) each country pursues its own interests, (2) efficient cooperation along the river and (3) partial cooperation among neighboring countries. We conduct cost-benefit analyses for these scenarios incorporating dam projects and their externalities. We demonstrate our approach for the Mekong River incorporating expert hydrological knowledge regarding installed hydropower capacity and dam location instead of the standard economic assumptions of such costs. Our results show that cooperation between Laos and Cambodia internalizes the negative impacts of dam construction in Laos on fishery in Cambodia, and Laos refrains from building some planned dams. Our results also hint that the 1995 Mekong Agreement among Thailand, Laos, Cambodia and Vietnam is internally stable.

Theoretical evaluation of integrated Basin at Risk (iBAR) method for international water conflict-cooperation analysis

“…Various disciplines have therefore investigated what may contribute to conflict and cooperation in STRBs, covering a wide variety of approaches in their studies (Wei et al, 2021;Offutt, 2022). Economic approaches focus on how water resources are economically valued, traded through market mechanisms, or distributed among different stakeholders, and how economic incentives influence cooperation or conflict in managing these resources (Blatter and Ingram, 2000;Arjoon et al, 2016;Zeng et al, 2016;Hossen et al, 2021), Statistical and datadriven approaches rely on historical data to identify patterns and correlations among the drivers of water interactions and provide insights for future scenarios (Vieira and Ribeiro, 2010;Farinosi et al, 2018;Veisi et al, 2020). Game theory studies aim to mathematically analyze the strategic interactions among the stakeholders in a transboundary context in order to understand the decision-making processes and outcomes (Madani et al, 2011;Debnath et al, 2018;Jhawar et al, 2018;Mehrparvar et al, 2020).…”