Abstract
Water resources allocation is an urgent problem for basin authorities. In order to obtain greater economic benefits from limited water supplies, sub-regions must cooperate with each other. To study the influence of cooperation among sub-regions and the symmetry of cooperation information on the interests of the basin authority and each sub-region, this study proposes a regional water allocation model in three different situations: (1) non-cooperation; (2) cooperation and information symmetry; (3) cooperation and information asymmetry. The proposed model clearly reflects the Stackelberg game relationship between the basin authority and sub-regions. Finally, the model is applied to the Qujiang River Basin in China, and the decisions of the basin authority and sub-regional managers of the Qujiang River Basin under three different situations are discussed. The results show that regional cooperation benefits both the cooperative regions and the social welfare value of the entire river basin, when compared with non-cooperation.
Highlights
Water is one of the most important resources for human survival, socio-economic development, and environmental sustainability (Bakker 2012 [1])
This is due to the high economic benefit value of industrial water and the pursuit of maximizing economic benefits by basin authority and regional managers
In order to study the influence of cooperation among sub-regions and the symmetry of information sharing on the economic benefits of the basin authority and each sub-region, this study proposed a regional water allocation model in three different scenarios
Summary
Water is one of the most important resources for human survival, socio-economic development, and environmental sustainability (Bakker 2012 [1]). The basin authority can influence the decisions of sub-regional managers by adjusting the initial water rights, while the decision-making of water managers of each sub-area affects the achievement of the larger goals This interactive decision fits within the leader-follower framework of a Stackelberg game (Stackelberg, 1934 [10]), and can be represented by a bi-level programming model (Wen and Hsu, 1991 [11]). Some scholars consider the Stackelberg game relationship between basin authority and sub-regional managers when making water resource allocation plans, they use the bi-level optimization model to further narrow the gap with reality. Many scholars have begun to study the allocation of water resources in the case of cooperation between sub-regions, but they have not considered the impact of information asymmetry on water distribution.
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