Current Institutional Affiliation
Professor, Applied Economics, University of Minnesota / Twin Cities

Award Information

Abe Fellowship 2007
Institutional Affiliation (at time of award):
Associate Professor, Applied Economics, University of Minnesota / Twin Cities
The Economics of Transboundary and Transnational Water Conflicts, and their Links to Economic Growth

Seckler et al. (1999) examine the demands and sources of fresh water for 118 countries and projected by 2025, one-quarter of the world’s population, and over one-third of people living in developing countries will experience severe water scarcity. The major reason offered for this projected increase in water scarcity is increased competition for water from households and from manufacturing and service sectors. This increase in water demand is a result of population growth and the growth in economic activity. Another form of competition for water arises when two or more regions rely on a shared source of water. For example, the Great Lakes is shared by the U.S. and Canada, and the Mekong river is shared by China, Myanmar, PDR Laos, Thailand, Cambodia, and Vietnam. While state or national governments typically control the amount of water received by the major productive sectors under its jurisdiction, it is usually at the mercy of its upstream counterparts in terms of the amount of water it has available to allocate: the more water an upstream area uses, the less water is available for those downstream. These river basin allocation problems exist, literally, all over the world. The Ganga river basin is one well known example of such a problem. Such situations provide a natural setting for conflicts among states and countries. Growing water scarcity across the world calls for careful thinking on how to manage this scarce resource. One suggestion for managing the water scarcity is to move water from water abundant to water scarce regions. China has already embarked on a long term project to transfer over 40 billion cubic meters of water each year from the Yangtze River to the Yellow River - the South-North Water Diversion Project in China. Such transfers are referred to as interregional or interbasin transfers. The Indian government plans to construct an equally ambitious aqueduct system linking five river basins. This ten year project is called the Inter Basin Water Transfer Link Project of India. Policymakers and economic analysts, however, note that the economic impact of such projects is largely unknown. Another suggestion for managing water scarcity is to develop an understanding of how to better allocate water across its major competing uses – intersectoral water allocation management. This project will examine the economics of intersectoral and interregional water allocation, and its potential link to economic growth. Specifically, I will examine the economics of two cases: (i) Interlinking the Ganga and Brahmaputra river basins in India, and (ii) the intersectoral and interregional allocation of water along the Tone River basin, Tokyo, and its surrounding prefectures. In the India case, the analysis will project the value of water (over time) to the states or regions [and respective agricultural, manufacturing, and service (major productive) sectors] along these river basins, calculate the "optimal" allocation of water with and without the project, and calculate the corresponding levels of gross domestic product to each sector. I intend to employ a similar strategy in analyzing the Tokyo case. Furthermore, I intend to study the institutional setting of water management in Japan, as it appears to be one of the few countries with a good record of managing its water resources.