Open AccessModelling for Water Resources Protection
Author(s) -
Zhang Wuhang
Publication year - 2020
Publication title -
iop conference series. earth and environmental science
Language(s) - English
Resource type - Journals
eISSN - 1755-1307
pISSN - 1755-1315
DOI - 10.1088/1755-1315/512/1/012050
Subject(s) - hedge , water resources , environmental economics , water pricing , resource (disambiguation) , water supply , business , transferability , electricity , water resource management , natural resource economics , water conservation , environmental science , computer science , economics , incentive , microeconomics , environmental engineering , engineering , ecology , computer network , electrical engineering , biology
This paper emphasizes the importance of water resource modelling. Due to the transferability and tradability of water resources, all water users will pursue a cost-effective strategy, thus forming the behavior of rational water use and saving water in subconscious. To increase the reliability of water supply and to provide a hedge against future water price volatilities, financial derivatives are incorporated in the water market and analytical solutions for pricing the European option are provided. This research provides a solution for water management problem if water resource is fully marketized, and the solution is applicable for other resources management such as gas, oil, electricity.