Bringing Environmental Benefits Into Caspian Sea Negotiations For Resources Allocation: Cooperative Game Theory Insights

The five littoral Caspian Sea states, namely Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan, have been in negotiations on establishing a legal regime for governing the sea for almost two decades. What makes the Caspian Sea conflict more complicated is the immense amount of valuable oil and gas resources in the sea. The previous studies of the conflict have intimately focused on finding an appropriate division rule for sharing the water as well as gas and oil resources in the seabed, ignoring the environmental utilities associated with the possible division rules. This is despite the fact that Caspian Sea is the home to the most precious sturgeons, supplying 90% of the world\u27s caviar. Therefore, this study bridges the gap of previous ones of the Caspian Sea conflict by adding the environmental dimension to the conflict analysis. Four different cooperative game theoretic solution concepts, including Nash-Harsanyi, Shapely, Nucleolus, and τ- value are used to find the fair and efficient allocation of the Caspian Sea resources to the five states. The results are finally compared with previous ones that ignored the environmental aspect of the problem to highlight the importance of environmental benefits in the Caspian Sea negotiations. © 2012 ASCE