Serial cost sharing of an international public good: water resource management in the Middle East.

Summary Traditional economic tools for environmental resource management raise two issues. From a normative perspective, the question of equity in resource sharing or resource use rents arises directly or indirectly, ex ante or ex post, and the implementation of these instruments runs up against the question of state sovereignty. We propose an alternative to the market of rights by considering international water resources as a common property of the different States. The exploitation and maintenance of these resources are delegated to an international water agency. These activities define an International Public Good. The non-cooperative game of serial cost sharing pits the international water agency against the two political entities. The mechanism thus defined has a strong Nash equilibrium. The resulting allocations satisfy the fairness tests of the welfare and sovereignty bounds of the states.