Cost Allocation of Multiagency Water Resource Projects: Game Theoretic Approaches and Case Study

Water resource projects are often jointly carried out by a number of communities and agencies. Participation in a joint project depends on how costs are allocated among the participants and how cost shares compare with the cost of independent projects. Cooperative N‐person game theory offers approaches which yield cost allocations that satisfy rationality conditions favoring participation. A new solution concept, the normalized nucleolus, is discussed and applied to a water reuse project in southern California. Results obtained with the normalized nucleolus are compared with those derived with more traditional solution concepts, namely, the nucleolus and the Shapley value.