River water quality management under incomplete information: application of an N-person iterated signaling game

One of the important issues in river quality management is to provide pollution control strategies which are acceptable for all stakeholders. When there is only one water quality checkpoint in a reach of a river which receives pollution loads of several dischargers and dischargers are penalized for any water quality violation, the game theory can be used for modeling the natural process of bargaining among load dischargers considering the assimilative capacity of a river. There are also some types of uncertainties in river water quality management which should be incorporated throughout the bargaining process. Signaling games can be utilized for modeling the bargaining among dischargers and developing perfect Bayesian equilibrium (PBE) strategies for pollution control. In this paper, a new methodology called N-person iterated signaling game is developed for river quality management considering the existing uncertainties in pollution loads of dischargers. The methodology can provide the stable PBE waste load allocation strategies. The practical utility of the proposed methodology is illustrated by applying it to a reach of the Zarjub River in Iran. This reach includes seven pollution load dischargers.