Conflict, Cooperation, and Institutions in International Water Management





10/2001 − 11/2005


In recent years, increasing competition in the use of international waters has given rise to a debate on conflict, cooperation and the design of adequate institutions in their management. Often it is argued that water resources should be managed at the river basin level and in an integrated manner. So far, the discourse has been dominated by contributions from practitioners, natural scientists, lawyers, and political scientists.

Against this background, this study seeks to make an economic contribution towards the analysis nexus of conflict, cooperation, and institutions in the management of international waters, arguing that economics has something to contribute to this topic. More specifically, the study asks under which conditions cooperation is in the interest of the riparian countries involved, and how institutions must be designed to realize potential gains of cooperation. The study asks for the role of the underlying problem structure for institutional design and cooperation, the role of issue linkage for the resolution of unidirectional externality problems, and the role of organizations for cooperation. In view of the discourse on Integrated Water Resources Management, particular emphasis is put on the expedient scope and form of respective institutional arrangements.

The study develops theoretic economic arguments on the nexus of conflict, cooperation, and institutions in the management of international waters by drawing upon various theories within the New Institutional Economics, including the theory of external effects, (non-cooperative) game theory, property rights economics, transaction costs economics, and a specific version of actor-centered institutionalism. These theoretic arguments are contrasted with empirical evidence on the basis of a cross-country review of international water management institutions, and an analysis of legal perspectives on institutional design. As such the study is informed by theoretical and empirical insights, and by taking hydrological and legal aspects into account, it can be understood as an interdisciplinary contribution at the interface of hydrology, law and economics.