Application of Nash Bargaining Theory in Water Allocation: A Conflict Resolution Approach

Operation of reservoir systems using a Bayesian Stochastic GA-based optimization model (BSGA) is investigated in this paper. This model considers the joint probability distribution of observed inflow and forecasted inflow to the reservoir. This way, the intrinsic and forecast uncertainties of inflow are considered. In this study, a multi objective approach that considers the interest of different agencies, water users and stakeholders in water allocation from the reservoir is developed. The proposed model maximizes an objective function based on the expected value of the Nash product. The Nash objective function includes utility functions of different stakeholders/water users as well as their relative authorities on the water allocation process. This work uses the general framework of Bayesian Stochastic Dynamic Programming (BSDP) proposed by Karamouz and Vasiliadis (1992). They utilized the Bayesian decision theory in the optimization algorithm for reservoir operation. In order to test the proposed methodology, the model is applied to the Satarkhan Reservoir system in the north-western part of Iran. The results show the significant value of the proposed model in water allocation from the reservoir considering the forecast uncertainty.