Sharing water and benefits in transboundary river basins

Abstract. The equitable sharing of benefits in transboundary river basins is necessary to solve disputes among riparian countries and to reach a consensus on basin-wide development and management activities. Benefit-sharing arrangements must be collaboratively developed to be perceived not only as efficient, but also as equitable in order to be considered acceptable to all riparian countries. The current literature mainly describes what is meant by the term benefit sharing in the context of transboundary river basins and discusses this from a conceptual point of view, but falls short of providing practical, institutional arrangements that ensure maximum economic welfare as well as collaboratively developed methods for encouraging the equitable sharing of benefits. In this study, we define an institutional arrangement that distributes welfare in a river basin by maximizing the economic benefits of water use and then sharing these benefits in an equitable manner using a method developed through stakeholder involvement. We describe a methodology in which (i) a hydrological model is used to allocate scarce water resources, in an economically efficient manner, to water users in a transboundary basin, (ii) water users are obliged to pay for water, and (iii) the total of these water charges is equitably redistributed as monetary compensation to users in an amount determined through the application of a sharing method developed by stakeholder input, thus based on a stakeholder vision of fairness, using an axiomatic approach. With the proposed benefit-sharing mechanism, the efficiency–equity trade-off still exists, but the extent of the imbalance is reduced because benefits are maximized and redistributed according to a key that has been collectively agreed upon by the participants. The whole system is overseen by a river basin authority. The methodology is applied to the Eastern Nile River basin as a case study. The described technique not only ensures economic efficiency, but may also lead to more equitable solutions in the sharing of benefits in transboundary river basins because the definition of the sharing rule is not in question, as would be the case if existing methods, such as game theory, were applied, with their inherent definitions of fairness.