Developing a methodology for real-time trading of water withdrawal and waste load discharge permits in rivers

In this paper, a new methodology is proposed for the real-time trading of water withdrawal and waste load discharge permits in agricultural areas along the rivers. Total Dissolved Solids (TDS) is chosen as an indicator of river water quality and the TDS load that agricultural water users discharge to the river are controlled by storing a part of return flows in some evaporation ponds. Available surface water withdrawal and waste load discharge permits are determined using a non-linear multi-objective optimization model. Total available permits are then fairly reallocated among agricultural water users, proportional to their arable lands. Water users can trade their water withdrawal and waste load discharge permits simultaneously, in a bilateral, step by step framework, which takes advantage of differences in their water use efficiencies and agricultural return flow rates. A trade that would take place at each time step results in either more benefit or less diverted return flow. The Nucleolus cooperative game is used to redistribute the benefits generated through trades in different time steps. The proposed methodology is applied to PayePol region in the Karkheh River catchment, southwest Iran. Predicting that 1922.7 Million Cubic Meters (MCM) of annual flow is available to agricultural lands at the beginning of the cultivation year, the real-time optimization model estimates the total annual benefit to reach 46.07 million US Dollars (USD), which requires 6.31 MCM of return flow to be diverted to the evaporation ponds. Fair reallocation of the permits, changes these values to 35.38 million USD and 13.69 MCM, respectively. Results illustrate the effectiveness of the proposed methodology in the real-time water and waste load allocation and simultaneous trading of permits.