COST ALLOCATION OF MULTIAGENCY WATER-RESOURCE PROJECTS - GAME-THEORETIC APPROACHES AND CASE-STUDY

Water resource projects are often jointly carried out by a number of c ommunities and agencies. Participation in a joint project depends on h ow costs are allocated among the participants and how cost shares comp are with the cost of independent projects. Cooperative N-person game t heory offers approaches which yield cost allocations that satisfy rati onality conditions favoring participation. A new solution concept, the normalized nucleolus, is discussed and applied to a water reuse proje ct in southern California. Results obtained with the normalized nucleo lus are compared with those derived with more traditional solution con cepts, namely, the nucleolus and the Shapley value.