Game Theory Modeling in River Valley Projects-Benin Owena River Basin

Abstract

This study applied game theory based model to analyze and solve sharing conflicts on funds allocation to the multi-purpose and the multi-objectives in Benin-Owena River Basin.  The model provides strategic decisions geared toward resolving the problem of apportioning ₦100 billion Naira development fund each to the two players, multi-objective [economic efficiency, regional economic distribution, state economic distribution, youth employment and environmental control] and the multi-purpose.[irrigation, hydropower, water supply, recreation, and erosion control]. The game simulation comprised five players on both the multi-purpose and multi-objective axis and the game theory converted to a linear programming problem and was analyzed using Simplex method. The analysis and presentation of results in this paper were based on Game Theory Simulation Model. However, Contingency and Association, Chi-square and Pearson Product Moment Correlation were carried out as Interaction, reliability and Validity tests. The result indicates the following proportional funds allocated in percentages to the multi-objectives: economic efficiency, regional economy distribution, state economic distribution, youth employment and environmental control are 23, 72, 0.00, 0.00, and 5%, respectively.  And funds apportioned to the multipurpose are in the following order: Irrigation, hydroelectric power, water supply, and recreation and erosion control are:  0.0, 0.0, 0.26, 0.16, and 58%, respectively. This study gave the indication that funds were available for water supply, recreation and erosion control for the multipurpose, which gave rise to solving economic efficiency and regional Economic Distribution for the multi-objective. In additional, to avoid conflict, the results suggest a need to design a mechanism to reduce the risk of losses of those players by a side payment, which provides them with economic incentives to cooperate. Game theory application in River basin management is invaluable; it gives optimal solution on government investment and wellbeing of people within the region for both multi-purpose and multi-objectives simultaneously.

Keywords: Optimal, Logical Model, Investment Fund, Game Theory, River Valley.

DOI: 10.7176/CER/11-2-09

Publication date:March 31^st 2019