Pilot Study on the Allocation of Initial Water Rights——A Case Study for the Middle Reaches of Heihe River Basin

Initial water rights allocation is a complex decision problem, and it is difficult for traditional methods to determine weights and solve the decision problem. In this study, an improved TOPSIS (Technique for order preference by similarity to ideal solution) method is proposed using vertical distance instead of Euclidean distance to calculate the closeness degree of schemes to the ideal solution, which overcomes the shortage of traditional TOPSIS method. In order to determine the weights of evaluation indexes reasonably, the improved method adopts game theory to harmonize and conjugate the subjective weight and the objective weight. On this basis, a comprehensive weight which eliminates the unilateral result can be obtained, and a model of initial water rights allocation in the watershed is established by the improved TOPSIS method. Finally, the proposed model is applied in the study of initial water rights allocation in Fuhuan River in Hubei Province, which shows rationality and validity when comparing with other models like traditional TOPSIS method, analytic hierarchy process and projection pursuit model.

Increasing water scarcity , rising costs of irrigation subsidies , and general economic liberalization are creating strong incentives for comprehensive water reform with establishment of tradable water rights and the development of markets in these rights. Experiences in Chile , Mexico , and California indicate that water allocation through markets in tradable water rights offers a viable approach to improving the efficiency of water allocation , and should receive serious consideration from developing country policy makers. Laws establishing tradable rights should be simple and comprehensive , should clearly define the characteristics of water rights and the conditions and regulations governing the trade of water rights ; should establish and implement water rights registers ; delineate the roles of the government , institutions , and individuals involved in water allocation and the ways of solving conflicts between them ; and provide cost-effective protection against negative third party and environmental effects which can arise from water trades .

Ecological compensation mechanism controlled by both river ecological water demand and regional water rights

The effective management of water resources in Alberta is crucial to sustainable agriculture, industrial development, and environmental management. The historical water allocation mechanism, administrative apportionment, has been viewed in recent years as ineffective and cumbersome. Accordingly, the revision of the Water Act in 1996, included an attempt to improve the efficiency of water allocation. By making the transfer of water rights possible, the revised Act provides many new options for water use and flexibility. The implications of transferable water rights in Alberta water policy must be carefully considered in order to determine the viability and suitability of such a system in the provincial context. This project examines some of the economic aspects of transferable water rights and the potential for effective water allocation by way of transfers in an Alberta setting. As a major part of this project, a hedonic price model, focusing on land values in southern Alberta, was constructed based on similar models, which have been used elsewhere to value water rights or agricultural products. The hedonic approach to market analysis uses the relationship between the price of land and the attributes of the land, such as water availability, soil quality and location, to explain differences in land prices. In this process, the hedonic model is used to estimate the implicit marginal price or value of each land attribute -- in our case, the marginal value of irrigation water. This value will provide us with an indirect estimate of the value of water rights in the region studied. An advantage of the technique is that it estimates the value that farmers express for irrigation water in the market place for land. Such values, then, give us an indication of the anticipated prices, which might prevail for water rights in southern Alberta. The focus of the study was an area of southern Alberta encompassing the counties of Wheatland, Newell, Cypress, Forty Mile, Taber, Warner, Lethbridge and Vulcan and the irrigation districts of Western, Eastern, St.Mary's, Taber, Lethbridge Northern, and portions of Raymond. Information was collected on the physical and economic characteristics of 230 land parcels, which were sold in this region in 1993 and early 1994. A crude comparison of the value of irrigated agricultural land and non-irrigated agricultural land in the sample reveals that irrigated land was worth, on average, $325 more per acre than non-irrigated land. In the ensuing analysis, it was estimated that the value of a parcel of land was determined largely by the buildings on it, the number of acres in the parcel, the proximity of the parcel to a major city (in this case Calgary or Lethbridge), and by the availability of irrigation water. In the hedonic model, the coefficient values of the variables included represent the marginal impact of each of these characteristics on land prices holding all other things constant. For example, the value of water rights represents the average difference between land values of farms that have access to irrigation and farms that do not. This study estimated that every dollar of improvements to farm buildings translates to a one cent increase in the per acre price of the land parcel, where the addition of one extra acre of land to a land parcel lowers the price per acre by $5.17 per acre. Land prices were seen to increase with the proximity of the parcel to large cities. Similarly, the results of the preferred model indicate that the implicit value of having access to irrigation water in southern Alberta is approximately $190 per acre, or, using the conventional estimate that irrigating one acre of land requires 1.5 acre feet of water, this translates to $126 per acre foot of irrigation water. Accordingly, it is revealed that the existence of water rights adds approximately 35% to the value of non-irrigated land. Since this value represents the implicit amount farmers are willing to pay for access to water, it could also be construed as an indirect measure of the value of water rights. From these results, it is reasonable to conclude that water rights do have a measurable impact on land values. Accordingly, proper incentives may be needed to ensure that water is used efficiently and not incorrectly treated as a relatively free or cheap good. One possible method of policy reform to achieve such a system would be the institution of a system of transferable water rights, permitting water to be traded, or effectively sold, at its market price or scarcity value. Further work was done to determine the potential effects of transferable water rights on the Eastern Irrigation District in southern Alberta. Farm budget information was used to gather information and create twelve representative farm types whose financial performance was analysed using linear programming with increasing water quantity constraints. The resulting productive water values were then used to imply potential reallocations of water among farm types and cropping systems. Analysis of the data gathered revealed that all representative farms faced downward sloping demand functions for water. The overall value of water for a 1% reduction ranged from $8 to $250 per acre foot, with the lowest value belonging to largely pasture operations and the highest value attributed to specialty crop producers. This large range in water values for the region indicates that there is sufficient heterogeneity within the EID to accommodate a transferable rights system. Further analysis of the data reveals that the implementation of a transfer system would result in water being transferred to specialty crop producers and the acreage devoted to specialty crops would increase. Small irrigated pasture operations and cereal crop producers would be the first to give up their water allocations under a transfer system. The analysis indicates that there is considerable potential for economic gains from water trade within this district, the main constraint being the market limitations to expanded specialty crop production. Using these two major studies and other sources, this report concludes with a brief evaluation of the economic advantages, disadvantages and other issues involved in instituting a system of transferable water rights in Alberta. Experience elsewhere, primarily in Australia and the western United States, strongly suggests that transferable water rights, despite some drawbacks and problems of implementation, can be a very worthwhile water policy tool. Now that such tradable water rights are permissible under the revised Water Resources Act of 1996, it is recommended that a pilot project involving transferable water rights be instituted in a water short basin or sub-basin in southern Alberta once a water management plan for that basin is completed.

This paper reports controlled experiments on markets linking downstream water entitlement holders with upstream landholders wishing to establish large tree plantations. The present study tackles the question of whether it matters who owns the initial water rights. Coase's (1960) theorem suggests initial endowments will not affect final equilibrium outcomes, in terms of water prices and water rights held by the various parties. That theorem is tested through experiments with human subjects who blindly represent different groups of water users. These are land owners in upstream water supply sub-catchments and downstream urban, irrigation and ‘stock & domestic’ water users, each with pre-specified marginal values of water. These values and equilibrium results calculated in an earlier modelling study provide the theoretical base for evaluating the new results. In the experiment the initial endowments of water rights were shifted between the up and downstream participants. Strong ‘endowment effects’ were observed; participants who held the greatest initial endowments often traded away fewer units than predicted by the theoretical model and captured greater shares of the gains of trade. Including new tree plantations in the market for permanent water entitlements can engender positive changes in economic surpluses in all sectors, with greater levels of social equity and protection of downstream wetland assets. This is in sharp contrast with reductions in river volumes reaching downstream parties and environmental assets in the absence of regulations requiring purchase of entitlements to cover extra water use by new plantations.

Despite all the potential benefits that are usually attributed to a system of tradable water rights, few countries have fully implemented such a legal institution. The Chilean water market is the exception, often promoted by international organisations such as the World Bank. Experts and governmental officials repeatedly argue that negative social consequences of the Chilean water market have been limited. This paper questions these claims and argues – using game theory combined with empirical evidence – that the introduction of a water market in Chile has created an obvious incentive to violate the water rights of underprivileged users.

This chapter first clarifies the concept of water rights, which is used in various and confusing ways in China. Reflecting the changing philosophy of water use towards sustainability, it then investigates the three-step approach to water rights initialisation: the first step is water planning, which determines how much water can be allocated within a basin or a region as well as among multiple water use sectors. The second step of water quantity allocation distributes quotas among regions and sectors within the basin or the administrative region. It finally comes to the third step of water abstraction permits, which further defines usufruct water rights as the legal basis of tradable water rights. The current legal systems of water planning, quantity allocation, and abstraction permits are examined to understand their deficiencies that may undermine the development of tradable water rights, based on which implications for reform are articulated.

Chile's 1,981 Water Code (CA81) established a market-oriented allocation model based on private, perpetual, and tradable water rights, sharply limiting the state's regulatory role. Over time, water scarcity, socio-environmental conflicts, and sustained academic and policy critiques revealed governance gaps regarding human needs, ecosystem protection, hoarding and non-use, state authority, and climate adaptation. This article examines Law No. 21,435 (CA22), enacted in 2022, asking whether it fundamentally transforms Chilean water law or incrementally adjusts CA81. It combines a systematic review of 63 studies on CA81 with a detailed legal and policy analysis of CA22, structured around eight critique clusters that encompass regime design, state capacity, distributional outcomes, environmental safeguards, conflict and judicialization, hoarding, and maladaptation. The findings show that CA22 recognizes access to drinking water and sanitation as an essential, inalienable human right, strengthens ecosystem protection, converts new water rights into temporary and conditional concessions, and expands the powers of the Dirección General de Aguas to intervene in allocation and scarcity management. Yet persistent institutional fragmentation, information deficits, uneven water markets, and over-allocation under climate stress mean that the reform yields a hybrid governance regime that reorients the neoliberal model.

Water rights management modeling was considered the useful measure to ensure efficient water resources allocation and to avoid intensifying conflicts over water rights. Regarding to the two major patterns of water rights across the world, namely, quantitative water rights (QWR) and duration-based water rights (DWR), the corresponding measures are fastidious. Since QWR was established to set water entitlements instead of DWR in Heihe River Basin, China, the disability of usual DWR tool, managing water diversion by water intakes closing (WIC) during a certain period, has arisen increasingly. The historical data also reflected the low reliability of DWR in allocating water resources quantitatively without modeling guidelines. Aimed at the challenge, a modeling framework and a mixed integer optimization model (MIOM) combing QWR objectives and DWR tools were developed, by which the optimal schemes in Pareto frontier were found to improve the water intake on/off events, including WIC stages, duration days, and starting date through long term series probability analysis and historical data. Results showed that the reliability of DWR allocation was enhanced and WIC duration was reduced significantly compared with current regulation. Scenario analyses indicated that MIOM was powerful for assisting DWR tool to manage QWR and the proposed framework was able to manage water rights efficiently in comparable basins.

Recent developments in water resource management include efforts to use the resource in a sustainable manner. Sustainable water use supports social objectives into the indefinite future without undermining environmental and hydrologic integrity. Key aspects are incorporation of mechanisms to insure ecological viability and recognition of the economic value of water. California is a wealthy state, with a complex mix of rules and infrastructure to move water to areas of demand deficit. Many mechanisms exist to allocate water and protect river ecology. There is continued degradation of river habitat due to an imbalance in water allocation. Markets mechanisms have been slowly introduced and are advocated to reallocate water to higher valued uses and the environment. There is widespread support for environmental concerns in the state, reflected in a willingness to pay for environmental water, water use behavior change, and legislative mandates. The CALFED Bay-Delta program and Central Valley Project Improvement Act include provisions to better reach a balance between the environment and other uses, including water transfers for instream flows using public and private money. Most water transactions are subject to environmental impact assessment, with most involving public agencies due to water passage through the Delta and/or wheeling through federal or state project infrastructure. Water allocation and distribution management in Chile is characterized by broad private-sector involvement based on historical participation in agricultural communities and reinforced in the Water Code of 1981, which encourages market transactions to redistribute water. Environmental integrity of river courses is endangered due to increased diversions, impoundment release schedules, water quality, and introduction of exotic species. Instream flows are not afforded legal status or explicit protection in the Water Code. Since 1994, new water rights petitions cannot infringe minimum instream flows. Currently, incremental environmental impacts are not readily apparent as more diversions occur, especially since an environmental baseline is not available in most areas. Many rivers are overallocated; when dormant water rights are exercised, environmental water will be taxed further. Water rights transfers occur between private parties and do not require environmental impact assessment; new infrastructure development may require regulatory approval. No transactions have occurred to secure additional environmental water. In both countries initial allocation rules have permitted overallocation of water rights. Water markets and transfers for environmental benefit require: (1) public and legislative support, (2) a management framework that takes into account environmental effects, and (3) income and willingness to pay levels that can compete with more traditional offstream uses.

Government response to water reform in Australia has included a buyback of water rights and public investments in irrigation infrastructure. In the case of the latter, a critically important but under-investigated feature of this policy response is that water users are subsequently not obliged to pay water prices that reflect the cost of gifted irrigation infrastructure. Thus, whilst considerable progress has been claimed towards establishing water prices that are cost-reflective, such as offering tradable water rights, much can still be done to improve the price signals received by rural and urban water users. This paper investigates the politics of establishing water charges that are cost reflective. More specifically, we discuss how political economy can potentially and markedly distort best practice water pricing. An assessment framework that draws from best practice pricing principles embodied in the National Water Initiative (NWI), Water Industry Regulatory Order (WIRO) and the Essential Services Commission (ESC) Act is used as a framework to consider areas of improvement with special attention given to arrangements in Victoria. Nonetheless, we argue that the results are applicable in most jurisdictions and suggest there is considerable scope for improving the efficiency of water prices.

An analysis of the allocation of Yakima River water in terms of sustainability and economic efficiency

Water markets are used in a wide variety of contexts to (a) increase access to water, and (b) increase water use efficiency by reallocating water to uses with a higher economic value. The global prevalence of water markets may help or hinder achievement of Sustainable Development Goal 6, making it essential to understand their role in water management. However, an overarching understanding of what water markets are and how they work across different regulatory and geographic contexts is surprisingly elusive. The literature separates water markets based on their formality and the nature of the goods and services being sold (typically either domestic water or agricultural), but growing water scarcity and increasing urban water demands means that agricultural and urban water use can no longer be considered separately. This review brings together two disparate strands of literature on water markets: (a) markets as a tool for re‐allocation between agricultural uses (including both water rights and irrigation services), and (b) urban water markets to expand access to safe water supplies. Based on a review of 148 studies of water markets, this article explores the similarities and differences between urban and agricultural markets across the spectrum of regulatory formality to identify key findings in water market operation and outcomes, including critiques of market function. Bringing together the work on urban and agricultural water markets highlights important lessons on the role water markets can play in achieving SDG 6.This article is categorized under: Human Water > Value of Water Engineering Water > Sustainable Engineering of Water

With the increasingly serious problems of water security and water shortage in the Yellow River Basin, the establishment of a fair and efficient water rights distribution system is an important way to improve water resource utilization efficiency and achieve high-quality development. In this paper, a double-level water rights allocation model of national canals–farmer households in irrigation districts is established. The Gini coefficient method is used to construct the water rights allocation model among farmer households based on the principle of fairness. Finally, the Wulanbuhe Irrigation Area in the Hetao Irrigation District is taken as an example. Results show that the allocated water rights of the national canals in the irrigation district are less than the current; for example, water rights of the Grazing team (4) canal are reduced by 73,000 m3 than before, in which water rights of farmer households 1, 2, 3, and 4 obtain compensation and 5, 6, 7, and 8 are cut by the water rights allocation model and the Gini coefficient is reduced from 0.1968 to 0.1289. The research has fully tapped the water-saving potential of irrigation districts, improved the fairness of initial water rights distribution, and can provide a scientific basis for the development of water rights allocation of irrigation water users in irrigation districts of the Yellow River Basin.

China is committed to building a water-saving society, and one of the most important measures is to build a water market. However, after 10 years of development, China’s water market is still inactive. We analyze the bargaining mechanisms of water rights trading based on the theory of information asymmetry. We find that the information asymmetry between the two sides of the transaction will cause the actual transaction price to deviate from the fair price, and the one with more information has stronger bargaining power, which can plunder more surplus. In detail, the bargaining power of the buyer makes the price lower than the fair price by 32.68%, and the bargaining power of the seller makes the price higher than the fair price by 78.52%. The interaction of them finally makes the price higher than the fair price by 45.23%. The net surplus shows regional heterogeneity. The net surplus in the Central region is higher than that in the East and West, implying that sellers in the Central region have stronger bargaining power. Moreover, there are slight differences in the net surplus across the trade and market types. Empirical results demonstrate the importance of accommodating information asymmetry into the pricing of water rights.