Cost Allocation in Water Resources Development - A Case Study of Sweden

Abstract

Methods for allocating the joint costs of a water supply facility among the different users are systematically compared using basic principles from game theory and fair division. It is shown that some of the more widely used methods, including the separable cost remaining benefit method, fail to satisfy some of these basic principles and that other lesser known methods appear to be more satisfactory. Application is made to a cost sharing problem among a group of Swedish municipalities developing a joint municipal water supply.