Designing a feasible and stable water sharing mechanism for transboundary river basins is a big challenge. The stochastic and uncertain characteristics of water flow in these rivers is among the main reasons which make the formation of cooperative coalitions with feasible water allocations and self-enforceable allocation agreements difficult. When the water in these river basins is scarce the task becomes even more challenging. This article focuses on the application of stochastic game theoretic extension of the bankruptcy concept to transboundary water resource sharing under water scarce and uncertain conditions. Among the water allocation vectors obtained from stochastic bankruptcy rules only the ones from the stochastic constrained equal awards rule were self-enforcing under uncertainty. Furthermore, the authors also proposed an allocation rule that can be used under a stochastic setting. The proposed rule provides water allocations that are self-enforcing in the absence of uncertainty. Generally, the application of the stochastic bankruptcy approach could be a source of important strategic information which can serve for the sustainable sharing and management of these vital sources of fresh water, particularly during water scarcity.

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