Optimal Water Allocation Based on Water Rights Transaction Models with Administered and Market-Based Systems: A Case Study of Shiyang River Basin, China

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Abstract
Water-rights trade has proved to be an effective method for coping with water shortages through the transfer of water resources between users. The water allocation system is classified into two categories based on information transparency and water rights transaction goals: administered system (AS) and market-based system (MS). A multi-agent and multi-objective optimal allocation model, built on a complex adaptive system, was introduced to direct the distribution of water resources under an AS in the Shiyang River Basin; it was compared with a market-based water rights transaction model using the bulletin-board approach. Ideal economic agent equations played a dominant role in both models. The government and different water users were conceptualized as agents with different behaviors and goals in water allocation. The impact of water-saving cost on optimal water allocation was also considered. The results showed that an agent’s water-saving behavior was incentivized by high transaction prices in the water market. Under the MS, the highest bid in the quotation set had a dominant influence on how trade was conducted. A higher transaction price will, thus, result in a better benefit ratio, and a lower one will result in inactivity in terms of water rights trade. This will significantly impact the economic benefit to the basin.
Funding Information
  • National Key Research and Development Program of China (2016YFC0401407, 2016YFC0401306)
  • National Natural Science Foundation of China (71503265)
  • International Science and Technology cooperation program of China (2016YFE0102400)

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