A Novel HydroEconomic - Econometric Approach for Integrated Transboundary Water Management Under Uncertainty

Abstract The optimal management of scarce transboundary water resources among competitive users is expected to be challenged by the effects climate change on availability. multiple economic and social implications, including conflicts between neighbouring countries, as well sectors within each country are difficult estimate predict, inform policy-making. In this paper, problem approached a stochastic multistage dynamic game: we develop apply novel framework for assessing evaluating different international strategies regarding use, under conditions hydrological uncertainty. Omo-Turkana basin in Africa used case study application, since it increasingly faces above challenges, tension Kenya Ethiopia individual country’s multi-sectoral competition use. mathematical combines hydro-economic model (water balance, costs benefits), an econometric (production functions demand curves) which tested cooperative non-cooperative (Stackelberg “ leader–follower ” game). results show cross-country cross-sectoral use—economic trade-offs, future availability every game case, sector-specific production function estimations (including residential, agriculture, energy, mining, tourism sectors), with nonparametric treatment, allowing technical inefficiency autocorrelated Total Factor Productivity, providing thus more realistic simulation. Cooperation two countries most beneficial growth. presents replicable, sophisticated modelling framework, holistic management.