Abbink, KlausMoller, Lars ChristianO'Hara, Sarah2012-03-302012-03-302010Environmental and Resource Economics09246460https://hdl.handle.net/10986/5457With the disintegration of the USSR a conflict arose between Kyrgyzstan, Uzbekistan and Kazakhstan over the transboundary Syr Darya river. Upstream Kyrgyzstan controls the Toktogul reservoir which generates hydropower demanded mainly in winter for heating. Downstream Uzbekistan and Kazakhstan need irrigation water in summer, primarily to grow an export crop (cotton). Regional agreements obliging Kyrgyzstan to higher summer discharges in exchange for fossil fuel transfers from downstream riparians in winter have been unsuccessful, due to lack of trust between the parties. Striving for self-sufficiency in irrigation water, Uzbekistan initiated new reservoir construction. This paper examines their economic impact. We report a laboratory experiment modelling the Syr Darya scenario as a multi-round, three-player trust game with non-binding contracts. Payoff schemes are estimated using real-life data. While basinwide efficiency maximisation requires regional cooperation, our results demonstrate that cooperation in the laboratory is hard to achieve. Uzbek reservoirs improve cooperation only weakly and their positive impact is limited to low-water years.ENEconomic Development: AgricultureNatural ResourcesEnergyEnvironmentOther Primary Products O130Socialist Systems and Transitional Economies: Natural ResourcesEnergyEnvironment P280CollectivesCommunesAgriculture P320Land Ownership and TenureLand ReformLand UseIrrigationAgriculture and Environment Q150Renewable Resources and Conservation: Water Q250Natural Resources and Domestic and International Conflicts Q340Journal ArticleWorld Bank