Water Trading: Locational Water Rights, Economic Efficiency, and Third-Party Effect
AbstractRivers flow downstream and unidirectionally. However, this fact has not yet been utilized in the institutional design for water trading. By utilizing this characteristic, we first designed a water trading system of “locational water rights.” This new system is able to mitigate the return flow-related and instream flow-related third-party effects of volumetric reliability from water transfers. We provided mathematical proof of its economic efficiency. We then applied this water trading system to the case of the Choushui River basin in Taiwan. In this area, agriculture is highly developed while domestic and industrial water demands have increased rapidly. Using an agent-based model simulation, we estimated the potential economic benefits of implementing the system of locational water rights in the Choushui River basin. View Full-Text
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Hung, M.-F.; Shaw, D.; Chie, B.-T. Water Trading: Locational Water Rights, Economic Efficiency, and Third-Party Effect. Water 2014, 6, 723-744.
Hung M-F, Shaw D, Chie B-T. Water Trading: Locational Water Rights, Economic Efficiency, and Third-Party Effect. Water. 2014; 6(3):723-744.Chicago/Turabian Style
Hung, Ming-Feng; Shaw, Daigee; Chie, Bin-Tzong. 2014. "Water Trading: Locational Water Rights, Economic Efficiency, and Third-Party Effect." Water 6, no. 3: 723-744.