A game theoretic approach for trading discharge permits in rivers

Area of Science:

• Environmental Science
• Water Resource Management
• Environmental Economics

Background:

• River systems face challenges in allocating treatment costs fairly among multiple dischargers with competing interests.
• Existing methods may not adequately address the complexities of conflicting objectives and equitable cost distribution.
• Effective water quality management requires innovative approaches to cost allocation and permit policies.

Purpose of the Study:

• To design a novel Cooperative Trading Discharge Permit (CTDP) methodology for equitable and efficient treatment cost allocation.
• To develop a framework that considers conflicting interests among dischargers in a river system.
• To optimize trading discharge permit policies for improved river water quality management.

Main Methods:

• Utilized the Nondominated Sorting Genetic Algorithm-II (NSGA-II) to develop a Pareto front for optimizing average treatment level and fuzzy risk of water quality standard violation.
• Employed Monte Carlo analysis to evaluate fuzzy risk and Young Bargaining Theory (YBT) to select the optimal non-dominated solution for initial cost allocation.
• Applied cooperative game theoretic approaches for equitable reallocation of cost savings within discharger coalitions.

Main Results:

• The CTDP methodology provides an initial equitable cost allocation based on optimized objectives.
• Cooperative game theory successfully allocated maximum cost savings among participating dischargers.
• The study demonstrated the practical application of the CTDP methodology in a case study of the Zarjub river.

Conclusions:

• The proposed CTDP methodology offers a robust framework for equitable and efficient treatment cost allocation in river systems.
• The integration of multi-objective optimization, bargaining theory, and game theory leads to optimal trading discharge permit policies.
• This approach enhances river water quality management by addressing the complex interplay of discharger interests and environmental objectives.