1. Homework Assignment 3 Impact of Infrastructure on Cooperation
The Aral Game - 3
Homework Assignment 3
Impact of Infrastructure on Cooperation

2. Aral Homework Assignment 3
Utilizes the regional allocation game
Background provided earlier
Hydro-economic optimization model in Appendix 2 of the text
Teams conduct analyses in the assignment
What is the role of investment in infrastructure and management on cooperation in the basin?

3. Background
Adding an investment option to the set of possible cooperation interventions in the region.
The two types of investments are:
increasing the reservoir capacity; and
increasing irrigation efficiency by moving to irrigation technologies that reduce runoff.
Introduce and analyze the impact of investment decisions aimed at improving water infrastructure and management.

4. Background
Your team is part of an International Panel (IP) that must evaluate possible cooperative arrangements and regional development for the region.
2026 is the target year for planning the Aral Basin cooperative arrangements.
Two major processes will affect the basin:
Deterioration of irrigation infrastructure:
The productivity per irrigated hectare ($/ha) decreases.
The return flows increase, meaning that a big portion of the water applied to fields is not utilized efficiently and is lost as return flows.
 Population growth:
Population in 2026 will increase by 15% causing a similar increase in the domestic energy demand of Kyrgyzstan.

5. Background
Kyrgyzstan will take a loan to increase the capacity of Toktogul Reservoir by 10%. To pay off this loan,
Hydro Energy Cost is increased by $US/kWh
Price to purchase energy is also is increased by $US/kWh
New irrigation technologies and canal lining will
decrease water needs for irrigation (per hectare) by
10% for both Uzbekistan and Kazakhstan,
increase agricultural production (Profit) by
20% per hectare for Uzbekistan and
25% per hectare for Kazakhstan
reduce return flow coefficients for
Uzbekistan from 0.4 to 0.3
Kazakhstan from 0.4 to 0.2.
Cost of the irrigation system investment would be paid by
Uzbekistan and Kazakhstan at the rate of $25 per irrigated hectare.

6. Assignment The IP has to:
Use the average climate scenario for flow data (already done)
Recalculate the relevant coefficients for the Aral Game model (already done)
Assess several alternative regional arrangements
Come up with two alternate regional cooperative arrangements for negotiation.
Coalitions and benefit allocations

7. Assignment
Report on the following for each of the scenarios (see spreadsheet for an example):
Short description of the parameters used
Coalition values
Energy produced
Land under irrigation
Water in Storage: Beginning and end of year.
Water used by each riparian
Water going to the Aral.
 For each scenarios calculate the Shapley Value allocation
Discuss the stability of the agreement
 Prepare < 1-page policy note for your presentation of the alternatives and the IP recommendation to the heads of states that will meet on November 17, 2016 at 12:30 pm.

8. Scenarios KG UZ KZ a no b yes c d e f g h KG noKG UZ KZ a no b
yes c d e f g h
KG no
no expansion of reservoir
KG yes
expansion of reservoir
UZ no
no irrigation rehab
UZ yes
irrigation rehab
KZ no
KZ yes