Efficiency and Equity in the Distribution of Renewable Resources: Water Allocation in the Jordan River Watershed
By Ahmad Slaibi and Ian J. Silverbrand
INTRODUCTION
When resources are shared by several countries, a tragedy of commons is expected because each nation's desire to maximize its utility is countered by “a world that is limited” in resources.1 Without a formalized system of regulation and allocation, the resource is likely to be ruined by over-consumption, because, as once articulated by Garrett Hardin, “[f]reedom in a commons brings ruin to all.”
Oftentimes, however, it can be difficult to create a formalized system of regulation and allocation. Within the Middle East, for example, the Jordan River Watershed is subject to this predictable over-consumption, largely because of the failure to regulate each of the uses of the riparians. One of the underlying reasons for this failure is that the traditional academic literature on the subject takes a strictly legal approach to resolving the allocation problem and fails to consider economic policy-based solutions. This Essay poses a law and economics-based framework for the allocation of the Jordan River Watershed's resources that could also apply to the distribution of any other shared renewable resource. After providing an overview of the academic literature discussing the use of economic markets and legal principles for the allocation of shared water resources, this Essay will apply a multilateral law and economic policy framework to the hydro-geographic and political circumstances existing in the Jordan River Watershed. Under this framework, each party's share of the common resource would be determined by customary or treaty law. Portions of the shares would thereafter be accessed for domestic consumption or traded by auction within a regional common resource financial market. This approach would guarantee a minimum level of equity for each party by providing guaranteed access to the resource, the opportunity to bid for greater access to the resource, and financial compensation as a consequence of participation in the regional auction.
When resources are shared by several countries, a tragedy of commons is expected because each nation's desire to maximize its utility is countered by “a world that is limited” in resources.1 Without a formalized system of regulation and allocation, the resource is likely to be ruined by over-consumption, because, as once articulated by Garrett Hardin, “[f]reedom in a commons brings ruin to all.”
Oftentimes, however, it can be difficult to create a formalized system of regulation and allocation. Within the Middle East, for example, the Jordan River Watershed is subject to this predictable over-consumption, largely because of the failure to regulate each of the uses of the riparians. One of the underlying reasons for this failure is that the traditional academic literature on the subject takes a strictly legal approach to resolving the allocation problem and fails to consider economic policy-based solutions. This Essay poses a law and economics-based framework for the allocation of the Jordan River Watershed's resources that could also apply to the distribution of any other shared renewable resource. After providing an overview of the academic literature discussing the use of economic markets and legal principles for the allocation of shared water resources, this Essay will apply a multilateral law and economic policy framework to the hydro-geographic and political circumstances existing in the Jordan River Watershed. Under this framework, each party's share of the common resource would be determined by customary or treaty law. Portions of the shares would thereafter be accessed for domestic consumption or traded by auction within a regional common resource financial market. This approach would guarantee a minimum level of equity for each party by providing guaranteed access to the resource, the opportunity to bid for greater access to the resource, and financial compensation as a consequence of participation in the regional auction.
