A solution for the flood cost sharing problem

Abstract

In this study, we model and study the flood cost sharing problem on a successive transboundary river shared between n-riparian states. We propose a Sequential Upstream Proportional Allocation (SUPA) solution and axiomatically characterise it. We make use of the Extended Producer Responsibility principle to define a characteristic form game which models cooperative behaviour among riparian states. We show that the proposed sharing rule coincides with the Shapley value of this game. The proposed allocation is also a member of the Core of the game