IDEAS home Printed from https://ideas.repec.org/a/eee/agiwat/v269y2022ics0378377422002633.html
   My bibliography  Save this article

Optimizing effluent trading and risk management schemes considering dual risk aversion for an agricultural watershed

Author

Listed:
  • Zhang, Junlong
  • Li, Yongping
  • You, Li
  • Huang, Guohe
  • Xu, Xiaomei
  • Wang, Xiaoya

Abstract

Increasing amounts of wastewater are discharged to water bodies, with a risk of exceeding their capacity to cope with such loads. Nutrient discharge forms two types of risk, i.e., economic and excess effluent risks. In this study, a Bayesian dual risk aversion based stochastic programming (BDRSP) is proposed for selecting optimal effluent trading and multi-risk management schemes. The BDRSP framework includes uncertain simulation for nutrient loading, optimization techniques for optimal trading planning, copulas for disclosing spatial correlation of nutrient pollution as well as TOPSIS for selecting optimal risk management schemes. BDRSP is applied to a real case of Daguhe watershed, China for planning of a NH3-N trading system. Trading ratios are estimated based on ratio between environmental damages at the watershed outlet that emission discharges in two sources. Optimal effluent trading scheme is obtained considering random pollutant loading and the associated dual risk. The spatial pattern of nutrient pollution risk is identified based on joint probability distributions and the related joint exceedance probability of different locations with copulas. Optimal dual risk management schemes are generated considering system benefit, unit revenue as well as NH3-N loading and its spatial pattern. Risk management schemes under high economic and excess effluent risk control levels (i.e. 0.85≤ε≤1, 0.4≤ρ≤0.6 and 0.85≤ε≤1, 0.8≤ρ≤1) are recommended.

Suggested Citation

  • Zhang, Junlong & Li, Yongping & You, Li & Huang, Guohe & Xu, Xiaomei & Wang, Xiaoya, 2022. "Optimizing effluent trading and risk management schemes considering dual risk aversion for an agricultural watershed," Agricultural Water Management, Elsevier, vol. 269(C).
    • Handle: RePEc:eee:agiwat:v:269:y:2022:i:c:s0378377422002633
    DOI: 10.1016/j.agwat.2022.107716
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378377422002633
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.agwat.2022.107716?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Yu, L. & Xiao, Y. & Jiang, S. & Li, Y.P. & Fan, Y.R. & Huang, G.H. & Lv, J. & Zuo, Q.T. & Wang, F.Q., 2020. "A copula-based fuzzy interval-random programming approach for planning water-energy nexus system under uncertainty," Energy, Elsevier, vol. 196(C).
    2. Guilin Gao & Xueting Zeng & Chunjiang An & Lei Yu, 2018. "A Sustainable Industry-Environment Model for the Identification of Urban Environmental Risk to Confront Air Pollution in Beijing, China," Sustainability, MDPI, vol. 10(4), pages 1-22, March.
    3. Torres-Rincón, Samuel & Sánchez-Silva, Mauricio & Bastidas-Arteaga, Emilio, 2021. "A multistage stochastic program for the design and management of flexible infrastructure networks," Reliability Engineering and System Safety, Elsevier, vol. 210(C).
    4. Hung, Ming-Feng & Shaw, Daigee, 2005. "A trading-ratio system for trading water pollution discharge permits," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 83-102, January.
    5. Kim, Jong-Min & Jung, Hojin, 2016. "Linear time-varying regression with Copula–DCC–GARCH models for volatility," Economics Letters, Elsevier, vol. 145(C), pages 262-265.
    6. Xiao Wang & Juan Wang & Xin Wang & Chujun Yu, 2022. "A Pseudo-Spectral Fourier Collocation Method for Inhomogeneous Elliptical Inclusions with Partial Differential Equations," Mathematics, MDPI, vol. 10(3), pages 1-18, January.
    7. Richard D. Horan & James S. Shortle, 2017. "Endogenous Risk and Point-Nonpoint Uncertainty Trading Ratios," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(2), pages 427-446.
    8. Chahor, Y. & Casalí, J. & Giménez, R. & Bingner, R.L. & Campo, M.A. & Goñi, M., 2014. "Evaluation of the AnnAGNPS model for predicting runoff and sediment yield in a small Mediterranean agricultural watershed in Navarre (Spain)," Agricultural Water Management, Elsevier, vol. 134(C), pages 24-37.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chunxiao Li & Jingjing Xu & Luxiaohe Zhang, 2022. "Can Emissions Trading System Aid Industrial Structure Upgrading?—A Quasi-Natural Experiment Based on 249 Prefecture-Level Cities in China," Sustainability, MDPI, vol. 14(17), pages 1-14, August.
    2. Wang, Taishan & Zhang, Junlong & You, Li & Zeng, Xueting & Ma, Yuan & Li, Yongping & Huang, Guohe, 2023. "Optimal design of two-dimensional water trading considering hybrid “three waters”-government participation for an agricultural watershed," Agricultural Water Management, Elsevier, vol. 288(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aaron M. Cook & James S. Shortle, 2022. "Pollutant Trading with Transport Time Lags," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(2), pages 355-382, June.
    2. Zhang, Hui & Cao, Libin & Zhang, Bing, 2017. "Emissions trading and technology adoption: An adaptive agent-based analysis of thermal power plants in China," Resources, Conservation & Recycling, Elsevier, vol. 121(C), pages 23-32.
    3. Chuan Luo & Zhaofu Li & Hengpeng Li & Xiaomin Chen, 2015. "Evaluation of the AnnAGNPS Model for Predicting Runoff and Nutrient Export in a Typical Small Watershed in the Hilly Region of Taihu Lake," IJERPH, MDPI, vol. 12(9), pages 1-19, September.
    4. Roy, René & Baker, Laurie & Thomassin, Paul J., 2013. "Estimating the Cost of Agricultural Pollution Abatement: Establishing Beneficial Management Practices in the Bras d’Henri Watershed," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150956, Agricultural and Applied Economics Association.
    5. Yates, Andrew J. & Doyle, Martin W. & Rigby, J.R. & Schnier, Kurt E., 2013. "Market power, private information, and the optimal scale of pollution permit markets with application to North Carolina's Neuse River," Resource and Energy Economics, Elsevier, vol. 35(3), pages 256-276.
    6. Wang, Taishan & Zhang, Junlong & You, Li & Zeng, Xueting & Ma, Yuan & Li, Yongping & Huang, Guohe, 2023. "Optimal design of two-dimensional water trading considering hybrid “three waters”-government participation for an agricultural watershed," Agricultural Water Management, Elsevier, vol. 288(C).
    7. Zhenjie Liang & Futian Weng & Yuanting Ma & Yan Xu & Miao Zhu & Cai Yang, 2022. "Measurement and Analysis of High Frequency Assert Volatility Based on Functional Data Analysis," Mathematics, MDPI, vol. 10(7), pages 1-11, April.
    8. Zhang, S.Q. & Li, Y.P. & Huang, G.H. & Ding, Y.K. & Yang, X., 2023. "Developing a copula-based input-output method for analyzing energy-water nexus of Tajikistan," Energy, Elsevier, vol. 266(C).
    9. Sergey S. Rabotyagov & Adriana M. Valcu & Catherine L. Kling, 2014. "Reversing Property Rights: Practice-Based Approaches for Controlling Agricultural Nonpoint-source Water Pollution When Emissions Aggregate Nonlinearly," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(2), pages 397-419.
    10. Karki, Ritesh & Tagert, Mary Love M. & Paz, Joel O. & Bingner, Ronald L., 2017. "Application of AnnAGNPS to model an agricultural watershed in East-Central Mississippi for the evaluation of an on-farm water storage (OFWS) system," Agricultural Water Management, Elsevier, vol. 192(C), pages 103-114.
    11. Simon Anastasiadis & Marie-Laure Nauleau & Suzi Kerr & Tim Cox & Kit Rutherford, 2011. "Does Complex Hydrology Require Complex Water Quality Policy? NManager Simulations for Lake Rotorua," Working Papers 11_14, Motu Economic and Public Policy Research.
    12. Reeling, Carson & Garnache, Cloé & Horan, Richard, 2018. "Efficiency gains from integrated multipollutant trading," Resource and Energy Economics, Elsevier, vol. 52(C), pages 124-136.
    13. Liang Zhang & Qinghai Zhao & Jianliang Chen, 2022. "Reliability-Based Topology Optimization of Thermo-Elastic Structures with Stress Constraint," Mathematics, MDPI, vol. 10(7), pages 1-22, March.
    14. Hao Chen & Zhixin Liu & Yinpeng Zhang & You Wu, 2020. "The Linkages of Carbon Spot-Futures: Evidence from EU-ETS in the Third Phase," Sustainability, MDPI, vol. 12(6), pages 1-18, March.
    15. Yiyu Feng & Ming Chang & Erga Luo & Jing Liu, 2023. "Has Property Rights Reform of China’s Farmland Water Facilities Improved Farmers’ Irrigation Efficiency?—Evidence from a Typical Reform Pilot in China’s Yunnan Province," Agriculture, MDPI, vol. 13(2), pages 1-27, January.
    16. Cao, R. & Huang, G.H. & Chen, J.P. & Li, Y.P. & He, C.Y., 2021. "A chance-constrained urban agglomeration energy model for cooperative carbon emission management," Energy, Elsevier, vol. 223(C).
    17. R. L. Bingner & R. R. Wells & H. G. Momm & J. R. Rigby & F. D. Theurer, 2016. "Ephemeral gully channel width and erosion simulation technology," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 80(3), pages 1949-1966, February.
    18. Estay, Manuel & Stranlund, John K., 2022. "Entry, location, and optimal environmental policies," Resource and Energy Economics, Elsevier, vol. 70(C).
    19. Ahmad, Shakeel & Jia, Haifeng & Chen, Zhengxia & Li, Qian & Xu, Changqing, 2020. "Water-energy nexus and energy efficiency: A systematic analysis of urban water systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    20. Catherine L. Kling, 2011. "Economic Incentives to Improve Water Quality in Agricultural Landscapes: Some New Variations on Old Ideas," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(2), pages 297-309.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:agiwat:v:269:y:2022:i:c:s0378377422002633. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/agwat .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.