Sharing Rivers: The Lancang-Mekong Case

By Prof. Zhao Jianshi 16 August, 2018

Tsinghua University's Prof. Zhao shares research on the benefits of transboundary cooperation in river basins

Cooperation is of great importance in transboundary river basins. However, this can become complicated for a variety of political, historical, and legal reasons.

 145 riparian countries share approximately 261 transboundary rivers

Globally, 145 riparian countries share approximately 261 transboundary rivers, which cover over 45% of the Earth’s land surface and contribute 60% of the world’s fresh water resources. Cooperation in transboundary river basins is crucial for riparian stakeholders in terms of regional security and economic development. Cascade reservoir system operation plays an important role in transboundary cooperation. In reality, cooperative cascade reservoir system operation in transboundary rivers is generally rare, although some successful cases do exist.

Severe drought calls for transboundary cooperation

A recent interesting case is the Lancang-Mekong River Basin, where transboundary stakeholders chose to set aside their conflicts and cooperated with each other due to the emergency events affecting the Mekong Delta water supply in 2016.

In spring 2016, China released emergency water supply to mitigate drought in downstream countries…

…prompting a meeting to discuss future cooperation

When a severe drought occurred over the Mekong Basin that in the spring of 2016, China released emergency water supply from its cascade reservoirs in the Lancang River to help alleviate the drought in the downstream area of Mekong Delta. It was reported that this emergency water supply increased the flow rate of the Mekong mainstream by 602~1010 m³/s, thus mitigated the drought in downstream countries.

As a result, China got diplomatic returns. The leaders from the six riparian countries convened a meeting in China to discuss future cooperation. The questions of why and how stakeholders achieve cooperation and in what cases is this cooperation stable are worthy of more research attention.

The Department of Hydraulic Engineering at Tsinghua University proposed a new quantitative analysis framework for the cooperative operation of cascade reservoir systems and benefit sharing in Lancang-Mekong River Basin, taking the water release event in 2016 as a case.

“…economic gains from cooperation are greater than from non-cooperation”

Their research shows that the economic gains from cooperation are greater than from non-cooperation, and there is a huge potential for cooperation, particularly in dry years. The systematic incremental benefit of cooperation increases with the decreasing of runoff, indicating that the dryer the basin, the more benefits cooperation can yield. The incremental benefit is relatively small in wet years, and thus the stakeholders’ willingness to cooperate will not be as high in consideration of the costs of cooperation. This conclusion can be verified by the emergency event affecting the Mekong Delta water supply in 2016, which was a dry year.

The presence of China in coalitions is important

For a typical dry year, the maximum systematic benefit can be achieved when reservoir operation is fully coordinated. In this case, the presence of China in partial coalitions is important. When stakeholders cooperate with China, large extra benefits can be obtained; when China is absent from the cooperation, the partial coalition between downstream countries only provides very small added benefits. This implies that the operation of cascade reservoir system in China influences the spatial and temporal patterns of streamflow in the Mekong River, and can provide substantial economic benefits to the downstream stakeholders in coalitions.

“When stakeholders cooperate with China, large extra benefits can be obtained…”

The results also illustrate an interesting phenomenon of a free-ride that occurs in partial coalitions. When China operates its cascade reservoir system to meet the demands of one cooperative stakeholder under partial coalitions, the other non-cooperative stakeholder may utilise the water freely and receive added benefits. This is a unique characteristic of the transboundary river basin system as a continuum.

The water release from the Jinghong reservoir varies significantly in different scenarios, which can be attributed to its role in meeting the irrigation and ecosystem demands of the Mekong River Basin under cooperation, particularly in dry season. When China chooses to cooperate with Mekong River Commission (MRC),  the three reservoirs need to release more water in the dry season, leading to hydropower losses upstream but extra gains at the system level.

Game theory can help Lancang-Mekong River Basin cooperation 

Game theory methods can help to identify cooperative solutions for the Lancang-Mekong River Basin. It is clear that the shares of benefit for each stakeholder vary with different methods.

“…the key to achieving cooperation is to establish an effective compensation scheme…”

China always receives compensation, while MRC always needs to provide compensation. This is because the upstream stakeholder, China, loses benefit under the grand coalition if there is no compensation. On the other hand, the downstream stakeholder, MRC, gains incremental benefit under the grand coalition. Therefore, the key to achieving cooperation is to establish an effective compensation scheme that ensures all riparian stakeholders have sufficient incentives to participate in the cooperation.

These solutions are all in the core of the cooperative game, leaving no incentive for stakeholders to depart from the grand coalition. However, the stakeholders have different solution preferences: China is more inclined to accept the Shapely method solution; Myanmar the Nucleolus solution; and MRC the Nash-Harsanyi solution. It is difficult to reach a consensus among stakeholders on the preferred solution for benefit sharing. The difficulty of reaching the consensus reduces the desire of all countries to join the cooperation. However, because these solutions are all in the core, the three stakeholders have no incentive to depart from the grand cooperation if one of the solutions is implemented, although they have divergent preferences on benefit sharing solution.

“The reality of the situation is more complicated, thus more in-depth research should be conducted”

Tsinghua’s study illustrates the possibilities and importance of cooperation among riparian stakeholders in the Lancang-Mekong River through multi-objective optimisation and cooperative game theory analysis. The reality of the situation is more complicated, thus more in-depth research should be conducted to address the conflicts and problems in transboundary river basins.

Further Reading

• Audit! Yangtze River Economic Belt – China’s first ever basin-wide environmental audit on the Yangtze River Economic Belt is an unprecedented step towards balancing economy & environment. China Water Risk’s Woody Chan shares the good and not so good findings
• China’s Renewable Energy Quotas – China is releasing its first ever renewable energy quotas along with Renewable Energy Power Certificates to improve trading; see what these mean for provinces & renewable enterprises with China Water Risk’s Yuanchao Xu
• Financing Green Infrastructure In The GBA: Key Takeaways – The Greater Bay Area accounts for 12% of China’s GDP but climate change means this is at risk. How can green finance help? China Water Risk’s Dharisha Mirando shares key takeaways from the HKUST conference
• Upper Yangtze: Integrated Water Management & Climate Adaptation – Experts from China & Switzerland introduce their joint project to enhance water management & climate adaptation in the Jinsha River Basin. What lessons have been learned & what is next?
• 3 Things You Need To Know About Hunan – Hunan connects provinces from the Yangtze’s upper to lower reaches – an important position. Check out 3 key things to know about Hunan as China develops the Yangtze River Economic Belt according to China Water Risk’s CT Low

• Why Do Hydro-Hegemons Cooperate? – Cooperation and conflict exist on a spectrum in transboundary river basins. Dr Selina Ho from Lee Kuan Yew School of Public Policy explores the policies of China & India, Asia’s two hydro-hegemons. How and why they work with other states on the Mekong & the Ganges?
• Integrating Climate & Water Diplomacy For Rivers – Climate change will likely intensify water-related challenges in river basins. Meanwhile, the Mekong River Commission is experiencing funding cuts. adelphi’s Sabine Blumstein shares 3 reasons for stronger integration of climate policy & water instruments
• Sharing Rivers: China & Kazakhstan – China and Kazakhstan share 24 rivers. Dr. Selina Ho from the National University of Singapore reviews their history of transboundary river co-operation and why this relationship is more advanced than China’s river relations with India & the Mekong states
• Avoiding Hydro Wars: With up to 124GW of planned hydropower on China’s transboundary rivers, no wonder regional geopolitical tensions over water is running high. Debra Tan gives the low down on China’s hydropower expansion, are there other options to avoid sparking hydro wars?