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The following paper is concerned with water sharing of the Ganges River between India and Bangladesh, with possible augmentation through water transfers from Nepal. We analyzed the case when water from Nepal can be transferred to Bangladesh through the upstream country, India, as the local geography only permits such water transfer. A game theoretic model is formulated to determine the optimal share of water diverted to Bangladesh by India, and the optimal amount of water transfer from Nepal. India may gain positive externalities from such water transfer. The positive externalities generated fromwater transfer fromNepalmay influence thewater share of both India and Bangladesh. In the absence of altruism, India would allow less water flow to Bangladesh than in the case when there is no provision to buy water from Nepal. We also explored whether positive externalities could induce India to buy water jointly with Bangladesh, and such a case will only occur if the countries possess altruistic concerns and share water according to an agreement.

In Amarasinghe, Upali A.; Sharma, Bharat R. (Eds.) Strategic Analyses of the National River Linking Project (NRLP) of India, Series 2. Proceedings of the Workshop on Analyses of Hydrological, Social and Ecological Issues of the NRLP, New Delhi, India, 9-10 October 2007. Colombo, Sri Lanka: International Water Management Institute (IWMI) ; The following paper explores the possible inter-linkage of the Ganges and Brahmaputra River Basin and analyzes its effect on future water allocation between the upstream country, India, and the downstream country, Bangladesh. We find that water transfer from the Brahmaputra River could be mutually beneficial for both countries. However, the only possible motivation for the richer upstream country, India, to agree to transfer water to the poorer downstream country, Bangladesh, is political altruism. Using a political economy model we find that, if there is a good political relationship between India and Bangladesh, then India could be altruistic toward Bangladesh and transfer more water downstream. Changes in political altruism factor, however, could entice India to exercise unilateral diversion, in which case simulations predict that Bangladesh would incur large environmental damages. Political uncertainty may also result in unilateral diversion of water by India, and could prevent agreement on water transfers from the Brahmaputra. We therefore explore the conditions under which Bangladesh could accept an Indian proposal to transfer water from Brahmaputra, despite political uncertainty.

Abstract
In the paper, using a political altruism model, we make an attempt to explain why an upstream country might agree to a treaty that recognizes and enforces the water claims of a downstream country. In a natural extension of the standard economic model, it is possible to explain the above phenomena, by allowing for altruism between countries. The altruistic concerns of the countries are dependent on other country's willingness to have a good political relationship. If both the countries maintain favorable political relations with one another, then the upstream country will care about the impacts of its water diversion on the downstream country's welfare. The paper also illustrates the case of water sharing of the Ganges River between India and Bangladesh. The Ganges River, like many other rivers in the world, ignores political boundaries. In Bangladesh, the final downstream country along the Ganges, freshwater availability depends on the share of water diverted by the upstream country, India. For decades, India and Bangladesh failed to resolve the water-sharing issues of the Ganges River. However, in 1996, both India and Bangladesh signed a major new agreement on water sharing (Ganges River Treaty) in an effort to resolve the dispute. Using the political altruism model developed in the paper, we examine why despite needing more water than is available under the treaty, India has adapted to shortages instead of resorting to conflict with Bangladesh.

ABSTRACTThe following paper is concerned with water sharing of the Ganges River between India and Bangladesh, with possible augmentation through water transfers from Nepal. We analyzed the case when water from Nepal can be transferred to Bangladesh through the upstream country, India, as the local geography only permits such water transfer. A game theoretic model is formulated to determine the optimal share of water diverted to Bangladesh by India, and the optimal amount of water transfer from Nepal. India may gain positive externalities from such water transfer. The positive externalities generated from water transfer from Nepal may influence the water share of both India and Bangladesh. In the absence of altruism, India would allow less water flow to Bangladesh than in the case when there is no provision to buy water from Nepal. We also explored whether positive externalities could induce India to buy water jointly with Bangladesh, and such a case will only occur if the countries possess altruistic concerns and share water according to an agreement.