Behavioral Sciences Approach to Analyzing Cooperation Dynamics in Transboundary Water Management between the U.S. and Canada in the Columbia River Basin

Abstract:

Globally, 263 lakes and rivers are shared between 145 countries. Cooperation on these waterways is necessary for water management, particularly in places that face growing risks due to climate change. The Columbia River, which straddles British Columbia, Canada, and the Pacific Northwest of the United States, has been showcased as one of the most successful examples of transboundary water management. Countries tend to cooperate when the net economic and political benefits are greater than those from unilateral action, and when they are shared equitably between parties. Under the Columbia River Treaty, Canada operates its dams to provide flood protection and maximize hydropower downstream. In exchange, the U.S. compensates Canada for half of the estimated increase in hydropower generated by the Treaty. This study addresses the question of how the share of benefits has shifted due to changes in dam operations to protect the environment, and how this may affect each side’s willingness to cooperate in the future. A system dynamics model was created using principles from socio-hydrology. The foundation of the model is a simplified hydrological model of the water system that simulates the production of hydropower and flood control benefits. Cooperation is conceptualized using the idea of other-regarding preferences from behavioral economics. Inequity aversion, which is when people value fairness most, represents the behavioral model of Canada and U.S. because the balance of benefits between these two countries is a key factor to explain the level of cooperation and influences how dams are operated. Each country has the option of Cooperation or NO Cooperation, and the expected utility is calculated for all combinations of choices by using a game theory approach. Then, logit dynamics functions are used to calculate the rate of change in willingness to cooperate between the two countries. To explore the effect of inequality aversion on cooperation dynamics, four scenarios with different configurations of aversion coefficients were tested to represent different levels of jealousy and guilt. The results provide insight into the drivers of cooperative behavior between countries under changing social and hydrological conditions to help understand how cooperation could be fostered on other transboundary waterways.