Yasmin Zaerpoor, Larry Susskind and Shafiqul Islam on
As we mentioned in our fourth post, Stakeholder Assessment is a useful tool for ‘mapping’ overlapping and conflicting demands for the same water. But once basic requirements have been met (i.e., in terms of quantity and quality of water), how should the relevant parties organize their interactions? Does each side push ahead and seek to realize whatever further advantage they can have, or should they turn their attention to their long-term collective or common interests? In either case, individuals and groups would be better off if they worked to create additional value (e.g. find ways to add to water supplies through more careful operation, commitments to reuse and recycle existing supplies and investment in more efficient technology).
This post will briefly describe two different approaches to negotiations and their connection to creating more value in the management of shared water resources. The first is hard bargaining or a “zero sum” approach (i.e. gains to one side are always at the cost of the other). The second is a mutual gains approach (in which gains to one side make possible gains to the other). We will end with a short list of tips for water managers that will make it easier for them to create value in the future.
Zero sum versus mutual gains
Early transboundary water treaties focused on economic trade and commerce, improving water security and establishing peace (Wescoat 1996). As the demand for water increased, transboundary water treaties increasingly focused on who would get what portion of available water resources. Most of the time, these negotiations assumed a fixed quantity of water – for example, the 1944 Treaty between the U.S. and Mexico on the Utilization of the Waters of the Colorado River provides 15 million acre-feet to the United States and 1-5 million acre-feet to Mexico; the 1959 Nile Agreement on the Full Utilization of the Nile Waters between Egypt and Sudan assumes that a fixed amount of water (84 BCM) would be allocated between the two countries (55.5 BCM/year to Egypt and 18.5 BCM/year to Sudan[i]).
When we assume the amount of water is fixed, it is very easy to fall into the mindset that negotiations must necessarily take on a zero-sum format. After all, if there is a fixed amount, then any gain to one party must be matched by losses to the other. This outlook often leads to hard bargaining, or a “test of will,” and drives out the possibility of cooperation on other issues.
Integrative, or mutual gains, negotiation, on the other hand, involves all sides looking for opportunities to reach an agreement that is mutually beneficial. It requires parties to think of trades in which each gets their most important interest met in exchange for helping the other side to achieve their top priority. So, for example, if one side is mostly concerned about having more water in the dry season, they don’t necessarily need an overall increase in their share of the total supply, they just need a guarantee that they will have more water for a certain part of the year. The other side, which might have more storage capacity, would promise to release a substantial amount of water during the dry season but still retain its overall annual share of the total supply. They might jointly invest in the infrastructure required to make such an agreement work. This kind of integrative solution to meeting the interests of the two sides – one getting a disproportionate share for a specific part of the year in exchange for the other maintaining its overall share of the annual supply while lowering its investment costs in maintaining the infrastructure – requires trust and cooperation.
The goal of a mutual gains approach is to reach a negotiated agreement that is more beneficial to both sides than what each might expect if there were no agreement and each pursued unilateral action.
Value creation in transboundary water management
In the case of transboundary water negotiation, value creation may occur in several ways – first, by changing the scale or scope of the issues on the agenda; second, by ‘creating’ more water; or third, by recognizing the full bundle of benefits that can be gained from cooperation.
Value creation by increasing the scale or scope of water management:The focus on the river basin as the unit of planning in Integrated Water Resources Management (IWRM) is intended to allow for ‘optimization’ of water use. Increasing the scale of water management, beyond the boundaries of the river basin, would allow parties to consider additional issues simultaneously – e.g. water for agricultural production, energy production and domestic use. Adding issues to the agenda makes it easier to imagine trades across multiple needs – for example, a country might invest in a hydroelectric dam in a neighboring country in exchange for discounted, or free, electricity. Considering multiple issues simultaneously is often the key to value creation in transboundary water negotiations (Grzybowski et al. 2010). The only drawback to this is that when governance boundaries and hydrologic boundaries don’t overlap, implementation problems arise.
Value creation by managing water as a flexible resource:The Water Diplomacy Framework suggests that value creation requires thinking about and managing water as a flexible, not a fixed, resource (Susskind and Islam 2012; Islam and Susskind 2013). There are several ways of ‘enlarging the pie,’ so to speak, through reclassification of “useable” water (for different purposes), investment in new technology or more efficient water usage, distinguishing between ‘blue’ and ‘green’ water, or through recognition of ‘virtual’ water (Allan 2011).
Value creation by trading across or bundling benefits:Sadoff and Grey (2002) expand on the types of benefits that can be gained from transboundary water cooperation (Table 1). They identify four categories of benefits: (i) benefits to the river (e.g., better ecosystem management); (ii) benefits from the river (e.g., food and energy production); (iii) reduction of costs because of the river (e.g., mitigation of tensions among countries over water allocation); and (iv) benefits beyond the river (e.g., greater economic or diplomatic cooperation among countries once they have cooperated on water).
Table 1. Types of cooperation and benefits of international rivers (Sadoff and Grey 2002)
In the case of the Indus Water Treaty described below, the agreement reached produced better water management and reduced costs (associated with potential future conflict over use of the water). Often, recognition of the secondary benefits of cooperation (i.e., benefits that extend beyond benefits to or from the river) can broaden the possibilities of value creation.
Indus Water Treaty
The Indus River system – comprised of Indus river and eight tributaries – is one of the largest river systems in the world. Although the Indus basin is shared by India, Pakistan, China and Afghanistan, only 13 percent falls within the latter two countries. Both Pakistan and India (specifically its northwestern provinces) are extremely dependent on the Indus River. After the 1947 India-Pakistan partition, India and Pakistan tried, unsuccessfully, to reach agreement on the use of the waters of the Indus on their own. However, India insisted on its sovereign right to use the rivers (since they originate in India) in the way they wanted, while Pakistan insisted on maintaining patterns of historical use. The two countries only reached agreement after eight years of negotiation with mediation help from the World Bank.
The Indus Water Treaty (IWT), signed in 1960, is often hailed as a successful example of a transboundary water agreement because it has enabled sustained water management between India and Pakistan despite geopolitical tensions (IUCN 2008). The main feature of the treaty is that the three Western Rivers (Indus, Jhelum and Chenab) are assigned to Pakistan while the three Eastern Rivers (the Sutlej, Beas and Ravi) are allocated to India. The two countries were able to reach agreement in spite of the fact that they didn’t (and they still don’t!) trust each other. How did these two countries create enough value to reach agreement?
Some approaches to creating value are more relevant at certain times than others: Increasing the scale of water management in the Indus River Valley to ensure joint management of the entire irrigation system in the basin would have created more value (Kirmani 1990). However, this idea was not viable given the lack of trust between the two countries at the time. In 1954, the World Bank backed off its initial insistence that both countries accept a basin-oriented agreement and instead suggested a straight 50-50 split – i.e. three tributaries to Pakistan and three to India (Salman 2013). While this approach was not optimal from a technical perspective, it was pragmatic.
Shifting from positions to interests: Pakistan objected strongly to the proposal because it believed that the Western Rivers would not supply enough water to replace existing use of the waters from the Eastern Rivers. The World Bank conducted several technical studies (which confirmed Pakistan’s concerns) and subsequently adjusted its proposal in 1957 to include storage reservoirs in the Western Rivers (Salman 2013).
Creating value: The World Bank realized that the dispute would not be resolved unless it could guarantee that the most important concerns on both sides were met. It therefore mobilized support from several other countries to establish the Indus Basin Development Fund (IBDF) to support the additional development of water infrastructure[ii]. IBDF financed several projects that benefited Pakistan, including eight link canals from the Western Rivers to areas that were irrigated by the Eastern Rivers and two storage dams on the Jhelum and Indus (Salman 2013).
In the end, conflict over the allocation of the Indus water between the two countries was avoided by treating water as a flexible resource (i.e. by creating storage dams and not depending on the “normal” accumulation of water in the rivers) and through constant reminders (from the World Bank) that there were indirect benefits (i.e., avoiding future conflict and increasing economic investment) to be gained from cooperation. In the end, India recognized it could achieve one of its key interests (e.g. increased foreign investment) by helping Pakistan achieve its interests.
The Indus Water Treaty is not the only illustration of value creation in transboundary water agreements. Others include:
- The Columbia River Treaty, signed by Canada and the United States in 1961, enabled the construction of three upstream dams (in Canada) that have continued to provide irrigation and flood control benefits as well as increasing the dependability and potential for hydroelectricity production downstream (in the U.S.). These benefits would not have been possible at the same cost in the absence of these projects (Grzybowski et al. 2010). In exchange, the U.S. provided its upstream neighbor a one-time payment (equal to half the value of estimated future flood damage that would be prevented) and half of the power generated by power plants in the U.S. that benefited from the management of the flow of the river via these upstream dams.
- Minute 319 on the Colorado River, negotiated in 2012 between the U.S. and Mexico, resolves a 70-year dispute on how the two countries approach water allocation and investment under extraordinary drought. The two countries collaborated to create significant value by negotiating a series of innovative trades on several interdependent themes (Verdini, 2017). For example, Mexico can now store part of its annual Colorado River water allocation in the U.S.-based Colorado River reservoir (Lake Mead), while it makes necessary repairs to the water infrastructure damaged by the 2010 Easter earthquake in Mexicali. In return, the U.S. ensures higher water storage levels at Lake Mead during periods of drought, thereby lowering the costs associated with developing new piping infrastructure for the City of Las Vegas.
- Similarly, Annex II of the 1994 Israel-Jordan peace treaty allots Israel 12 million cubic meters (MCM) of water in the summer and 13 MCM in the winter from the Yarmouk River. In exchange, Jordan can store 20 MCM of its water in Lake Tiberias (in Israel) in the winter (Susskind and Islam 2012). Furthermore, the two countries agreed to jointly develop ‘existing and new water resources, increasing the water availability… and minimizing wastage of water resources.’ In effect, not only did they come up with creative solutions to reduce their own vulnerability to water shortages, they also recognized water as a flexible resource and committed to ‘creating’ more water.
Each of these examples serves as a useful reminder that transboundary water negotiations can move beyond hard bargaining to include agreements that are mutually beneficial.
Creating value in future negotiations
What lessons can a new generation of water negotiators take from these examples?
- There are multiple approaches to creating value – but not all are always appropriate. There are several strategies for creating value during transboundary water management (i.e., increasing the scale of water management, approaching water as a flexible resource, and considering the ‘bundle of benefits’), but not all strategies will work in every context. For example, in the case of the IWT negotiations, the World Bank quickly realized that a basin-wide water management approach would not work in the case of Pakistan and India. So, they looked for ways to ‘create’ more water (i.e. increasing Pakistan’s storage capacity) and by reminding the disputants that there were benefits to be had beyond the river.
- Focus on the other sides’ interests, not just your own. Each party’s water security depends, in part, on its neighbors’ water security. By focusing on underlying interests rather than stated (politically inspired) demands, it is possible to identify ways of satisfying everyone’s most important concerns. Emphasizing interests may also make it easier to move past the challenge of appearing to give water away (i.e. sharing water) by focusing instead on sharing the benefits that only collaborative management of shared waters can provide. One country’s announced position may be that it must have more water, when in reality its reason for making this demand is to reduce its risk of running short of hydroelectricity if a drought occurs. If a neighboring country can guarantee to cover any shortage of electricity by providing a portion of its power generation in emergency circumstances, then the demand for additional water is, in fact, satisfied without changing the overall allocation of the water supply.
- Consider multiple issues simultaneously. Less experienced negotiators tend to negotiate items on an agenda one-by-one. This often leads to stalemate on one issue or another. An alternative approach, often times more effective, is to consider multiple issues together – as a package. This allows parties to ‘trade’ across issues they value differently (Islam and Susskind 2013). This takes very skillful management of the negotiation agenda.
- Engage in co-inventing different packages without demanding upfront commitments. Co-inventing different packages or elements of a package before making any final commitments is crucial. If parties start out promising each other that “nothing is agreed until everything is agreed,” they can be much more creative and collaborative. This requires that details of an ongoing negotiation process remain confidential until after a final agreement has been reached. For example, in the case of the Colorado River U.S.–Mexico negotiations on Minute 319, the vast array of negotiators from both countries (U.S. and Mexican federal officials; Colorado River Basin states representatives from Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming; Metropolitan Water Agencies; and Non-Governmental Organizations) jointly decided that they would collaborate through points of tentative agreement (POTAs), building momentum step by step, and that they would only issue joint press releases, in order to reduce the possibility that elements of the ongoing negotiations might become politicized internally in each country (Verdini, 2017).
- Once different packages have been suggested, look for packages that are good for them, great for you (Susskind 2014). Mutual gains negotiation accepts the fact that parties are at the table to ensure that their own interests are met. While they may have some shared or overlapping interests, they are likely to have conflicting interests as well. This doesn’t mean, though, that one party can’t achieve its interests by addressing another side’s interests. The fact is, there are almost always value-creating opportunities in transboundary water negotiation while, there are always value claiming moments as well. A mutual gains approach does not require that parties put aside their own interests in favor of cooperation. Rather, it assumes that it will be easier for all sides to reach agreement if they invest some time in value creation in advance of distributing the value they have created. For example, in the case of the Columbia River Treaty, U.S. negotiators recognized that they could avoid future flooding (thereby saving a substantial amount of money) by investing in dam construction in Canada. They achieved their own interests (i.e., reducing future flooding, increasing hydroelectricity production) by creating value (i.e., one-time lump sum payment and 50 percent of the additional power generated in the U.S. due to upstream storage) for Canada.
- Share information when possible to help ‘enlarge the pie.’ Often times, negotiators mistakenly believe that they will ‘weaken’ their position in negotiation by sharing any information. While it would be foolish for a party to reveal what the minimum is that it must have or what the maximum is that it can offer, some information sharing is sure to be advantageous. For example, all sides should be willing to reveal their highest priority interests. This will make it easier for others to suggest mutually advantageous trades. Sometimes, adding a neutral party or a facilitator can make information sharing easier. Each side can alert the neutral facilitator to its most important interests. The neutral can often use this information to help organize the negotiation agenda or even to suggest possible trades for the parties to consider. For example, when India and Pakistan hit a stalemate in the Indus Water Treaty negotiation, Pakistan’s communication about its interests enabled the World Bank to draft an alternative proposal that included hydraulic works to address those interests.
There are several ways in which countries can create value (i.e., increase the scale of water management, manage water as a flexible resource, and recognize and trade across the ‘bundle of benefits’) but not all are always feasible. Shifting from ‘zero sum’ to mutual gains outcomes will require water negotiators to choose pragmatic ways of creating value and to look for ways to meet their own interests while also meeting other parties’ interests. While this is by no means easy, we believe it to be critical to ensuring long-term transboundary water cooperation.
[i] The remaining 10 BCM was considered ‘lost’ due to evaporation and seepage at Lake Nasser.
[ii] Of the IBDF’s approximately US$800 million, India contributed US$174 million.
Bibliography
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Yasmin Zaerpoor
Yasmin Zaerpoor is a PhD candidate in the Environmental Policy and Planning group in MIT’s Department of Urban Studies and Planning (DUSP).
Larry Susskind
Larry Susskind is the founder of CBI and Professor at the Massachusetts Institute of Technology and Vice-Chair for Instruction at the Program on Negotiation at Harvard Law School
Shafiqul Islam
Shafiqul Islam is a Professor of Civil and Environmental Engineering and Water Diplomacy, and the Director of the Water Diplomacy Initiative at Tufts University. Follow on Twitter: @ShafikIslam