Game theory and the development of resource management policy
This chapter is concerned with the relevance, if any, of game theory to a major resource management issue, namely the management of internationally shared fishery resources. It is argued that the economics of the management of such resources cannot be understood other than through the lens of game theory. Several elementary game theory concepts are discussed that are of utmost policy relevance, but which are, as of yet, poorly understood by most policymakers. In addition, the chapter discusses...
Ariel Dinar Stefano Farolfi Fioravante Patrone and Kate Rowntree
Governments and developing agencies promote participatory approaches in solving common pool resource problems such as in the water sector. Two main participatory approaches have been applied separately, namely negotiation and mediation. This chapter applies the role-playing game that is a component of the companion modeling approach a negotiation procedure and cooperative game theory Shapley value and the nucleolus solution concepts , which can be mirrored as a mediated mechanism, to a water...
Yellow River water allocation regime analysis
Water allocation among the 11 different provinces of the Yellow River basin, including Tianjin municipality, dates back to 1954, when 47 billion cubic meters of the total 54.5 billion cubic meters natural runoff were allocated for irrigation. Adjustments were made in 1959, 1961, 1970, and 1987 according to various criteria. The amount of water allocated for consumptive use approved by China's State Council in 1987 was 37 billion cubic meters, against the estimated annual average runoff of 58...
Contributors
Jiro Akita is Professor of Economics at the Graduate School of Economics and Management, Tohoku University. He is currently Vice-Chair of the Department of Economics. His research area is international finance, macroeconomics, and environmental economics. His translated book on environmental economics has become one of the major references in Japan. Jos Albiac is Researcher at the Department of Agricultural Economics, Agrifood Research and Technology Center Government of Aragon, Spain . His...
Adour River negotiations
The analysis in this chapter is based on a specific negotiation process regarding water allocation, water storage capacity, and water prices for users in the Adour catchment area in southwestern France. This example provides an excellent case study for analysis using the Rausser-Simon multilateral bargaining model, because a substantial amount of information about the context of the negotiations is available. This information includes details about the hydrology of the river, the use of the...
Philippe Delacote
Consumer boycotts are commonly used by citizens protesting against unfair environmental, social, or health practices by firms. Game theory offers simple tools to analyze the impact and the potential for success of such actions. Consumer boycotts may be viewed as a war of attrition between a group of consumers and the targeted firm. Focusing on environmental boycotts, this chapter shows that a simple trade-off between the consumers' hurting capacity and their opportunity cost of boycotting makes...
George B Frisvold and Kyle J Emerick Conclusions and policy implications
Rural-urban water transfers in developing countries have received increasing attention from economists and other social scientists Bauer 2004 Biswas 2006 Galaz 2004 Hearne 2004 Merrett 2003 Michel 2002 Mumme and Lybecker 2006 Riaz 2002 Rosegrant and Schleyer 1996 . Demand for large-scale transfers will probably increase with the rise of megacities large urban agglomerations in many developing countries Biswas 2006 Varis 2006 . The issues highlighted in the stylized theoretical and numerical...
Contents
List of illustrations List of contributors Acknowledgments 1 Game theory a useful approach for policy evaluation in natural resources and the environment JOS ALBIAC, JOAQU N S NCHEZ-SORIANO, AND ARIEL DINAR 2 Game theory and the development of resource management policy the case of international fisheries 12 3 Traditional grazing rights in sub-Saharan Africa and the role RACHAEL E. GOODHUE AND NANCY McCARTHY 4 Application of partition function games to the management PEDRO PINTASSILGO AND MARKO...
Appendix The formulation of the profit function in the KatAware model and the
The assumptions used in the calculation of the annual profit in the role-playing game and in the formulation of the characteristic function in the cooperative model are provided here. Since the cooperative game model and the role-playing game differ in the way they calculate payoffs and players, different symbols will be used for the same variables in the calculations of the characteristic function and in the profit function. Calculation of the profit functions in the KatAware model In the...
Review of the management of internationally shared fishery resources stage
The background survey begins with a discussion of the relatively straightforward case of transboundary fish stock management. This is followed by an examination of the more complex case of straddling fish stocks. Economists view capture fishery resources, as they do all natural resources, as a form of natural capital, assets that are capable of yielding a stream of economic returns broadly defined through time. Since fishery resources are capable of growth like forests, but unlike minerals ,...
Allocation regime options
Based on historical surface water allocation practices and water conflicts in the basin, this chapter endeavors to examine three options of water allocation regimes commonly used. Option 1 Water allocation through unregulated withdrawals. Under such a regime, each region withdraws water freely according to its needs. The actual water withdrawal depends mainly on its diversion capacity and the costs of increasing diversion capacity. Option 2 Water allocation through prior agreed water quotas....
Conclusion
This book deals with several issues related to natural resources and the environment, including use of such resources as fisheries, climate change, water transfer and management, land allocation and management, and citizens' responses to environmental disputes with governments and corporations. The different game-theoretic approaches developed and applied to the case studies in the individual chapters provide meaningful messages that can be of use to parties involved in each of the cases and to...
Prisoners dilemma
The 1982 Convention does, as has been pointed out, allow for the possibility that States or other entities sharing a fishery resource will not be able to achieve an agreement and will, as a result, manage their segments of the resource independently, without the benefit of cooperation. While some States sharing a resource appear to have at least some degree of awareness of the consequences of noncooperation, in other cases States seem only dimly aware of the potentially damaging consequences of...
Game theory analysis of consumer boycotts Conclusion and policy implications
This chapter has explored the conditions under which a consumer boycott based on environmental considerations may be successful. A boycott is presented here as a war of attrition between a firm and a group of consumers over the choice of the producing technology. The model presented assumes perfect information and ignores coordination issues or free-rider problems. However, even with this very simple setup, some interesting implications can be derived. The ability of the boycotting group to...
The models Prisoners dilemma
In this conflict every participant has the option of acting selfishly or cooperatively. Independently of what other actors decide, each individual actor considers that selfish action is the best option, and will thus choose that option. However, all these selfish individuals acting together will build the worst possible outcome, since each one of them would have been in a better situation if everyone had cooperated. These are the special characteristics of the prisoner's dilemma characteristics...
Unregulated fishing
The new international Law of the Sea, as it pertains to fisheries, is not rigid and static rather it is in a process of evolution through State practice. Game theory analysis can contribute by helping to direct the evolution along appropriate lines. The problem of unregulated fishing provides an example. The FAO has put forward a plan of action to curb what it refers to as illegal, unreported, and unregulated fishing FAO 2001 . The efforts of the FAO are being supplemented by the OECD 2006 . It...
References Ots
Adams, J., Crews, D., and Cummings, R. 2004 The sale and leasing of water rights in the western United States an update to mid-2003, Water Policy Working Paper 2004-004. Bauer, C.J. 2004 Results of Chilean water markets empirical research since 1990, Water Resources Research, 40 W09S06, doi 10.1029 2003WR002838. Binmore, K., Rubinstein, A., and Wolinsky, A. 1986 The Nash bargaining solution in economic modelling, RAND Journal of Economics, 17 176-88. Biswas, A.K. 2006 Water management for major...
Side payments
Side payments, which involve transfers in some form, serve, it will be recalled, both to shift the focus from sharing the harvests to sharing the economic benefits from the fishery, and to increase the scope for bargaining. Until recently the value of side payments has been understood only vaguely by policymakers. There are, however, some encouraging signs that this may be changing.22 An example of the message getting through, as it were, is provided by the Canada-United States Pacific Salmon...
NashHarsanyi bargaining model
A standard game theory approach assumes that every player possesses the same information at the beginning of the game. In reality, information asymmetry among players is a common phenomenon. To accommodate the need for modeling such circumstances, Harsanyi developed in 1967-68 the Bayesian model for incomplete information, and defined the consistent Bayesian game as all players sharing the same prior belief, their different beliefs at the start of the game originating from the observation of...
Stefan Ambec and Lars Ehlers
This chapter considers environments in which several agents countries, farmers, cities share water from a river. Each agent enjoys a concave benefit function from consuming water up to a satiation level. Noncooperative extraction is typically inefficient and any group of agents can gain if they agree on how to allocate water with monetary compensations. This chapter describes which allocations of water and money are acceptable to riparian agents according to core stability and several criteria...
Boycott as a war of attrition with perfect information
A war of attrition is a model of aggression between two players. The game takes the form of a succession of identical periods. In each period, the two players choose simultaneously between remaining in the game or withdrawing. The model is stationary each period represents the same type of problem for both players, with no information gain or change in costs or benefits. The winning player is the one able to remain longer in the game. In the context studied here, the two players are a group of...