This study investigates the problem of conjunctive management of surface and ground water resources with two non-identical users in a dynamic game-theoretic setting. A planning horizon of two periods and a discounted profit objectives for two non-identical users are considered under both centralized and decentralized management settings. Optimal water allocation policies and general optimal Nash equilibria of water usage are obtained for each user in each period under the decentralized setting. For the special case of identical users, symmetric Nash equilibria are derived. Under the centralized setting, optimal water allocation policies as well as equilibrium water usage are obtained for each user in each period. For the case of identical users,unique and symmetric independent of groundwater aquifer’s transmissivity solutions are found. It is also shown that coordination between the decentralized and centralized solutions is possible under certain conditions. Numerical examples are provided to study the effect of the time value of money on water usage. The main contribution of this work is that it provides analytical results for the conjunctive use of ground and surface water with two non-identical users over two periods. Another novel aspect of our model is that it allows for groundwater transmissivity such that water levels are not equalized at the end of each period.
