A game-theoretic framework for sustainable water allocation in agriculture: Enhancing economic and water efficiency in Akrotiri district (Cyprus)

Water scarcity is an escalating issue in Mediterranean countries, including Cyprus, where climate change, population growth, rapid urbanization, and economic development place significant pressure on water resources. This study focuses on optimizing the allocation of recycled water for agricultural use in the Akrotiri district, using a game theory approach to maximize net benefits (NB) associated with crop production by considering conventional and nonconventional water resources. A linear optimization framework is developed in which eighteen crop types act as players in a cooperative game, contributing to an overall benefit- and cost-sharing model. Optimal water allocation schemes prioritize crops with high economic productivity and low water demand, enhancing both sustainability and profitability. Based on the available water for irrigation in 2022 (baseline case), the NB is 23 million euros whereas the required subsidies, sourced from external entities, amount to 2 million euros. Groundwater recharge via managed aquifer recharge (MAR) is included as a scenario leading to a similar NB but increases subsidies to 3.5 million euros. Additional scenarios explore losses from aging infrastructure (increase of subsidies up to 70 %), water quality constraints due to the presence of pollutants (NB and subsidies are 15 and 4 million euros, respectively), various storage strategies (reduction of subsidies about 20 % of the baseline value) and future scenarios based on projected climatic conditions, resulting in the highest subsidies of nearly 9 million euros. This methodology offers a robust decision-making tool for policymakers and planners, helping to navigate the complexities of water allocation under uncertain future climatic conditions.