Valuing certainty in a consensus-based water allocation mechanism

We present an interdisciplinary approach to attach economic value to model certainty. The central theme of this paper concerns valuing certainty in water resource management, specifically resource allocation. A conceptual framework is developed to study (1) a hypothetical scenario of three water users attempting to mutually agree on allocation of some fixed amount of water amongst themselves and (2) California water policy negotiations along the lines of Adams et al. (1996). We attempt to answer how uncertainty in a policy variable affects the "allocation solution" in such consensus-based decision-making processes. This study finally evolves into economic valuation of uncertainty reduction and willingness to pay for the same.