The Allocation of Groundwater Resources and Managing Conflict between Stakeholders: Evidence from Iran

Abstract

Scarce water resources often involve decision-makers with conflicting interests. Effective management requires balancing objectives and strategies of multiple stakeholders. The present study analyzes the potential compromise solutions between stakeholders, using a combination of game theory and a positive mathematical programming (PMP) model. The two key players are the government, which minimizes environmental impacts such as groundwater withdrawal, and local farmers, who maximize economic profit. We employ four conflict resolution methods to calculate the players' payoffs. The results show that creating a transactional relationship between the stakeholders reduces groundwater extraction by 36% and 37%, while the farmers' net income only drops by 8% and 9%, respectively, compared to the baseline scenario.