An “initial-engineering-end use” quasi-market pricing mechanism under cascading risk for cross-regional water rights trading
Water rights trading within a market economy has emerged as an effective solution for enhancing water use efficiency and addressing water scarcity. However, the development of a pricing mechanism that accounts for the spatial heterogeneity of water resources remains a critical challenge. This study...
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| Format: | Article |
| Language: | English |
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Elsevier
2025-03-01
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| Series: | Agricultural Water Management |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S0378377425000435 |
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| author | Xuxia Li Huimin Wang Gang Liu Liu Yang Zhou Fang Yi Xiao Xiaoying Lai Li Gao Ying Teng |
| author_facet | Xuxia Li Huimin Wang Gang Liu Liu Yang Zhou Fang Yi Xiao Xiaoying Lai Li Gao Ying Teng |
| author_sort | Xuxia Li |
| collection | DOAJ |
| description | Water rights trading within a market economy has emerged as an effective solution for enhancing water use efficiency and addressing water scarcity. However, the development of a pricing mechanism that accounts for the spatial heterogeneity of water resources remains a critical challenge. This study proposes an “initial-engineering-end use” quasi-market pricing mechanism based on empirical research of cross-regional water rights trading in Pingxiang, Jiangxi, China. The mechanism comprises three stages, each designed to address specific risks. To support these stages, data from field studies is used to calibrate three unique pricing models: the stochastic differential game, incomplete contract theory, and the Nash-bargaining model. We analyze the interactions among equilibrium water prices across these stages to explore the cascade effects. In Pingxiang, the local government has successfully adopted and implemented this mechanism. Empirical results and practical applications reveal several key findings. (1) A comparative analysis of national governance across different countries indicates that the quasi-market pricing mechanism effectively determines end use water prices in China. (2) Initial corporate and government investments mitigate trading risks and enhance stability. (3) Overlooking ecosystem service value leads to the undervaluation of initial and end use water prices. (4) Practical applications of the proposed mechanism in Inner Mongolia, China, and the Murray-Darling Basin, Australia, demonstrate that end use water prices are generally higher in water-scarce regions. Overall, this study provides a practical and adaptable approach for pricing cross-regional water rights trading, applicable to both water-rich and water-scarce regions globally. |
| format | Article |
| id | doaj-art-3106124b062a4a44a9830d45f1a7c1b4 |
| institution | Kabale University |
| issn | 1873-2283 |
| language | English |
| publishDate | 2025-03-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Agricultural Water Management |
| spelling | doaj-art-3106124b062a4a44a9830d45f1a7c1b42025-02-06T05:11:02ZengElsevierAgricultural Water Management1873-22832025-03-01309109329An “initial-engineering-end use” quasi-market pricing mechanism under cascading risk for cross-regional water rights tradingXuxia Li0Huimin Wang1Gang Liu2Liu Yang3Zhou Fang4Yi Xiao5Xiaoying Lai6Li Gao7Ying Teng8College of Management and Economics, Tianjin University, Tianjin, 300072, China; Laboratory of Computation and Analytics of Complex Management Systems (CACMS), Tianjin University, Tianjin, 300072, ChinaCollege of Management and Economics, Tianjin University, Tianjin, 300072, China; Laboratory of Computation and Analytics of Complex Management Systems (CACMS), Tianjin University, Tianjin, 300072, China; State Key Laboratory of Hydraulic Engineering Simulation and Safety, Tianjin University, Tianjin, 300072, ChinaCollege of Management and Economics, Tianjin University, Tianjin, 300072, China; Laboratory of Computation and Analytics of Complex Management Systems (CACMS), Tianjin University, Tianjin, 300072, China; State Key Laboratory of Hydraulic Engineering Simulation and Safety, Tianjin University, Tianjin, 300072, China; Corresponding author.College of Management and Economics, Tianjin University, Tianjin, 300072, China; Laboratory of Computation and Analytics of Complex Management Systems (CACMS), Tianjin University, Tianjin, 300072, ChinaCenter for Integrative Conservation, Xishuangbanna Tropical Botanical Garden, Chinese Academy of Sciences, Menglun, 666303, ChinaCollege of Management and Economics, Tianjin University, Tianjin, 300072, China; Laboratory of Computation and Analytics of Complex Management Systems (CACMS), Tianjin University, Tianjin, 300072, China; State Key Laboratory of Hydraulic Engineering Simulation and Safety, Tianjin University, Tianjin, 300072, ChinaCollege of Management and Economics, Tianjin University, Tianjin, 300072, China; Laboratory of Computation and Analytics of Complex Management Systems (CACMS), Tianjin University, Tianjin, 300072, China; State Key Laboratory of Hydraulic Engineering Simulation and Safety, Tianjin University, Tianjin, 300072, ChinaSchool of Science, RMIT University, Melbourne, VIC, 3000, AustraliaCollege of Management and Economics, Tianjin University, Tianjin, 300072, China; Laboratory of Computation and Analytics of Complex Management Systems (CACMS), Tianjin University, Tianjin, 300072, ChinaWater rights trading within a market economy has emerged as an effective solution for enhancing water use efficiency and addressing water scarcity. However, the development of a pricing mechanism that accounts for the spatial heterogeneity of water resources remains a critical challenge. This study proposes an “initial-engineering-end use” quasi-market pricing mechanism based on empirical research of cross-regional water rights trading in Pingxiang, Jiangxi, China. The mechanism comprises three stages, each designed to address specific risks. To support these stages, data from field studies is used to calibrate three unique pricing models: the stochastic differential game, incomplete contract theory, and the Nash-bargaining model. We analyze the interactions among equilibrium water prices across these stages to explore the cascade effects. In Pingxiang, the local government has successfully adopted and implemented this mechanism. Empirical results and practical applications reveal several key findings. (1) A comparative analysis of national governance across different countries indicates that the quasi-market pricing mechanism effectively determines end use water prices in China. (2) Initial corporate and government investments mitigate trading risks and enhance stability. (3) Overlooking ecosystem service value leads to the undervaluation of initial and end use water prices. (4) Practical applications of the proposed mechanism in Inner Mongolia, China, and the Murray-Darling Basin, Australia, demonstrate that end use water prices are generally higher in water-scarce regions. Overall, this study provides a practical and adaptable approach for pricing cross-regional water rights trading, applicable to both water-rich and water-scarce regions globally.http://www.sciencedirect.com/science/article/pii/S0378377425000435Water rights tradingQuasi-market pricing mechanismStochastic differential gameIncomplete contractNash-bargaining model |
| spellingShingle | Xuxia Li Huimin Wang Gang Liu Liu Yang Zhou Fang Yi Xiao Xiaoying Lai Li Gao Ying Teng An “initial-engineering-end use” quasi-market pricing mechanism under cascading risk for cross-regional water rights trading Agricultural Water Management Water rights trading Quasi-market pricing mechanism Stochastic differential game Incomplete contract Nash-bargaining model |
| title | An “initial-engineering-end use” quasi-market pricing mechanism under cascading risk for cross-regional water rights trading |
| title_full | An “initial-engineering-end use” quasi-market pricing mechanism under cascading risk for cross-regional water rights trading |
| title_fullStr | An “initial-engineering-end use” quasi-market pricing mechanism under cascading risk for cross-regional water rights trading |
| title_full_unstemmed | An “initial-engineering-end use” quasi-market pricing mechanism under cascading risk for cross-regional water rights trading |
| title_short | An “initial-engineering-end use” quasi-market pricing mechanism under cascading risk for cross-regional water rights trading |
| title_sort | initial engineering end use quasi market pricing mechanism under cascading risk for cross regional water rights trading |
| topic | Water rights trading Quasi-market pricing mechanism Stochastic differential game Incomplete contract Nash-bargaining model |
| url | http://www.sciencedirect.com/science/article/pii/S0378377425000435 |
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