eprintid: 1429845
rev_number: 30
eprint_status: archive
userid: 608
dir: disk0/01/42/98/45
datestamp: 2014-05-14 18:40:15
lastmod: 2021-09-26 22:40:19
status_changed: 2014-05-14 18:40:15
type: article
metadata_visibility: show
item_issues_count: 0
creators_name: Erfani, T
creators_name: Harou, JJ
creators_name: Binions, O
title: Simulating water markets with transaction costs
ispublished: pub
divisions: UCL
divisions: B04
divisions: C05
divisions: F44
keywords: water trading;
    hydro-economic model;
    optimization modeling;
    basin modeling;
note: © 2014. The Authors. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
abstract: This paper presents an optimization model to simulate short-term pair-wise spot-market trading of surface water abstraction licenses (water rights). The approach uses a node-arc multicommodity formulation that tracks individual supplier-receiver transactions in a water resource network. This enables accounting for transaction costs between individual buyer-seller pairs and abstractor-specific rules and behaviors using constraints. Trades are driven by economic demand curves that represent each abstractor's time-varying water demand. The purpose of the proposed model is to assess potential hydrologic and economic outcomes of water markets and aid policy makers in designing water market regulations. The model is applied to the Great Ouse River basin in Eastern England. The model assesses the potential weekly water trades and abstractions that could occur in a normal and a dry year. Four sectors (public water supply, energy, agriculture, and industrial) are included in the 94 active licensed water diversions. Each license's unique environmental restrictions are represented and weekly economic water demand curves are estimated. Rules encoded as constraints represent current water management realities and plausible stakeholder-informed water market behaviors. Results show buyers favor sellers who can supply large volumes to minimize transactions. The energy plant cooling and agricultural licenses, often restricted from obtaining water at times when it generates benefits, benefit most from trades. Assumptions and model limitations are discussed. © 2014 The Authors.
date: 2014-06
official_url: http://dx.doi.org/10.1002/2013WR014493
vfaculties: VENG
oa_status: green
full_text_type: pub
primo: open
primo_central: open_green
verified: verified_manual
elements_source: Scopus
elements_id: 946899
doi: 10.1002/2013WR014493
lyricists_name: Erfani, Tohid
lyricists_name: Harou, Julien
lyricists_id: TERFA00
lyricists_id: JHARO88
full_text_status: public
publication: Water Resources Research
volume: 50
number: 6
pagerange: 4726-4745
issn: 0043-1397
citation:        Erfani, T;    Harou, JJ;    Binions, O;      (2014)    Simulating water markets with transaction costs.                   Water Resources Research , 50  (6)   pp. 4726-4745.    10.1002/2013WR014493 <https://doi.org/10.1002/2013WR014493>.       Green open access   
 
document_url: https://discovery.ucl.ac.uk/id/eprint/1429845/1/wrcr20943.pdf