Developing Efficient Coordination Schemes to Control Over-Pumping in the Heihe River Basin, China

Abstract:

Many wicked water resources problems are approached in a social planner perspective. This not always matches the real institutional and policy-making context, where, rather, multiple decision-makers (DMs) can act independently, or weakly cooperate, ultimately producing system-wide inefficient trade-offs. The idea in this work is to adopt a more realistic approach, where the multi-DMs nature of the problem is preserved and the uncoordinated DMs are driven, thorough coordination mechanisms, towards a more system-wide efficient solution. An agent-based modelling framework linked to a surface and groundwater model is used to design these coordination mechanisms as constraints to the independent agents (i.e., DMs) behaviour.

In the Heihe Basin the ongoing introduction of smart meter IC-card systems on farmers’ pumping wells will soon allow monitoring and control of abstractions with the goal of preventing further depletion of the resource. The major interest of policy makers in the region concerns the development of new and the improvement of existing legislation on pricing schemes and/or groundwater quotas. The model outcome where agents act rationally but selfishly is compared to the optimal solution at system-level assuming perfect coordination and cooperation. The optimal solutions with respect to the given utility functions are computed using nonlinear optimization with a rolling out time horizon. The Pareto-Frontier is synthesized through an exhaustive sampling of the weight coefficient space and related to the current and to the historical management of the last 4 decades. The best parameter values for the proposed coordination mechanisms are determined and the alternatives are compared with respect to their efficiency and acceptability.

Preliminary results suggest that a regulatory tax on groundwater of about a factor 10 of the current resource fee is required to increase the elasticity of the groundwater demand curve such that reducing consumption becomes attractive. The payback of the tax in form of subsidies to the farmers reduces the losses due to higher expenses. Findings will be presented to the local decision makers and have the potential to improve water governance in the Heihe River Basin in the coming years.