|State A, an upstream state, has developed a dam upstream on river X, which is primarily used for hydropower generation, although water is stored within the reservoir for the benefit of agricultural needs within the state. State A is a relatively poor state compared to its downstream neighbour state B. State A wishes to store more water in the reservoir in order to provide increased supplies of water for agricultural purposes throughout the year. However, state B argues that such water storage will have a detrimental effect on their downstream agricultural needs.
Having jointly commissioned a joint options appraisal, the parties agree to jointly cooperate over the regulation of the river. Annual, seasonal and monthly flow regimes are therefore worked out, which allow for agricultural needs in upstream state A, as well has hydropower generation. State B is able to benefit from relatively stable water flows to satisfy its basic agricultural requirements. While there is not enough water for state B to expand its agricultural industry in the river basin, it is able to rely on favourable prices for the sale of energy from the hydropower generation in upstream state A, which benefits industrial development in the region.
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