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Summary The increasing population and large scale growth with the development of modern science and technology has indicated very high stress on water sector in Rajasthan in India. Availability of water and uniformity of rainfall distribution is changing day by day due to shifting of monsoon in Rajasthan. The spatial and temporal variations in the rainfall in different river basins in Rajasthan are drastic due to which flood situation arises in the tributaries of Chambal river basin every year. Simultaneously on the other hand drought situation arises in the other different places in the most of the river basins which are also under dark zone. In totality natural water resources are also limited in Rajasthan so there is an urgent need for its proper planning, development and management of the available water duly taking care of environmental, ecological, socio-economic aspects and their inter-relationships. Annual surplus water of about 1437 MCM in the river Chambal is going waste and ultimately reaches to sea after creating flood situations in various places in India including Rajasthan, while on the other hand 1077 MCM water is a requirement in the four other basins in Rajasthan i.e. Banas, Banganga, Gambhir and Parbati at 75% dependability. Interlinking and water transfer from Chambal to these four river basins is the prime solution for which 372 km link channel including 9 km tunnel of design capacity of 300 cumec with 64 m lift is required.

Producción Científica, This paper analyzes the dynamic interaction between two regions with interconnected river basins. Precipitation is higher in one river-basin while water productivity is higher in the other. Water transfer increases productivity in the recipient basin, but may cause environmental damage in the donor basin. The recipient faces a trade-off between paying the price of the water transfer, or investing in alternative water supplies to achieve a higher usable water capacity. We analyze the design of this transfer using a dynamic modeling approach, which relies on non-cooperative game theory, and compare solutions with different information structure (Nash open-loop, Nash feedback, Stackelberg) with the social optimum. We first assume that the equilibrium between supply and demand determines the optimal transfer price and amount. We show that, contrary to the static case, in a realistic dynamic setting in which the recipient uses a feedback information structure the social optimum will not emerge as the equilibrium solution. We then study different leadership situations in the water market and observe that the transfer amount decreases towards a long-run value lower than the transfer under perfect competition, which in turn lays below the social optimum. In consequence, the water in the donor’s river-basin river converges to a better quality in the presence of market power. Finally, we numerically compare our results to the Tagus-Segura water transfer described in Ballestero (2004). Welfare gains are compared for the different scenarios. We show that in all dynamic settings, the long-run transfer amount is lower than in Ballestero’s static model. Further, we show that the long-run price settles at a lower level than in Ballestero’s model, but is still higher than the average cost-based price determined by the Spanish government.