Applying Interconnected Game Theory to Analyze Transboundary Waters: A Case Study of the Kura-Araks Basin

A number of environmental problems are international in nature, including many water management issues. Rivers, for example, do not recognize political boundaries. Therefore, pollution generated in one country can affect neighboring countries, while water extraction in an upstream country can affect water flow and water availability in a downstream country. The situation creates an interdependency among countries, which might lead to disputes over the management of transboundary water. Therefore, coordination among the countries is necessary for effective management of these transboundary resources. The focus of a recently published study (Khachaturyan and Schoengold, 2018) is the transboundary Kura-Araks Basin (see Figure 1 for its location), which is a major river system in the South Caucasus, with about 11 million people living in the basin. The countries in the basin are Armenia, Azerbaijan, Georgia, Iran, and Turkey, with Armenia, Azerbaijan, and Georgia having over 80 percent of the streamflow. The Kura-Araks Basin is a primary source of water for agricultural, industrial, and municipal uses in the South Caucasian countries. The study determines whether there are economic benefits to be gained from cooperation in the management of the Kura River (shared between Azerbaijan and Georgia), and under what conditions cooperation is an achievable outcome. Azerbaijan withdraws about 35 percent of the total available renewable water resources while Georgia only withdraws about 3 percent