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Governments and developing agencies promote participatory approaches in solving common pool resource problems, such as in the water sector. Two main participatory approaches have been applied separately, namely negotiation and mediation. In this paper the authors apply the Role-Playing Game that is a component of the Companion Modeling approach, a negotiation procedure, and the Cooperative Game Theory (Shapley value and the Nucleolus solution concepts) that can be mirrored as a mediated mechanism to a water allocation problem in the Kat watershed in South Africa. While the absolute results of the two approaches differ, the negotiation and the cooperative game theory provide similar shares of the benefit allocated to the players from various cooperative arrangements. By evaluating the two approaches, the authors provide useful tips for future extension for both the Role-Playing Games and the Cooperative Game Theory applications.

Catchment --- Catchment Management --- Catchments --- Common Property Resource Development --- Domestic Water Consumption --- Environment --- Environmental Economics and Policies --- Flow --- Groundwater --- Industry --- Irrigation --- Lead --- Meters --- Natural Resources --- Rainfall --- Rural Development --- Sanitation and Sewerage --- Storage Capacity --- Surface Water --- Total Water Requirements --- Town Water Supply and Sanitation --- Wastewater Treatment --- Water --- Water and Industry --- Water Conservation --- Water Resources --- Water Rights --- Water Sector --- Water Sources --- Water Supply and Sanitation --- Water Supply and Sanitation Governance and Institutions --- Water Supply and Systems --- Water Use --- Watershed

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This paper reviews various applications of cooperative game theory (CGT) to issues of water resources. With an increase in the competition over various water resources, the incidents of disputes have been in the center of allocation agreements. The paper reviews the cases of various water uses, such as multi-objective water projects, irrigation, groundwater, hydropower, urban water supply, wastewater, and transboundary water disputes. In addition to providing examples of cooperative solutions to allocation problems, the conclusion from this review suggests that cooperation over scarce water resources is possible under a variety of physical conditions and institutional arrangements. In particular, the various approaches for cost sharing and for allocation of physical water infrastructure and flow can serve as a basis for stable and efficient agreement, such that long-term investments in water projects are profitable and sustainable. The latter point is especially important, given recent developments in water policy in various countries and regional institutions such as the European Union (Water Framework Directive), calling for full cost recovery of investments and operation and maintenance in water projects. The CGT approaches discussed and demonstrated in this paper can provide a solid basis for finding possible and stable cost-sharing arrangements.

Cost Recovery --- Cost Sharing --- Economic Theory and Research --- Environment --- Environmental Economics and Policies --- Industry --- Law and Development --- Macroeconomics and Economic Growth --- Marginal Cost --- Municipalities --- Public Works --- Sanitation and Sewerage --- Town Water Supply and Sanitation --- Urban Water --- Urban Water Supply --- Wastewater Treatment --- Water --- Water and Industry --- Water Conservation --- Water Consumption --- Water Infrastructure --- Water Law --- Water Policy --- Water Projects --- Water Resource --- Water Resources --- Water Rights --- Water Sector --- Water Supply and Sanitation --- Water Supply and Sanitation Governance and Institutions --- Water Supply and Systems --- Water Supply Facilities --- Water Supply System --- Water Supply Systems