One of the critical conflict issues in multi-purpose reservoir development is over the allocation of joint costs among uses. Given an efficient joint projects, fairness and equity is required to qualify the cost allocation method. This paper addresses to the need for developing a new method which can account for spillover effects from other uses forming a Coalition. This is particularly the case with a new use representing environmental interest comes into the ground. Within a framework of cooperative game theory, some theoretical solution concepts proposed by formulating the problem in partition function form.