Centralized and Decentralized Approaches to Water Demand Management

Yi Xiao, Liping Fang and Keith W. Hipel
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Yi Xiao: Department of Systems Design Engineering, University of Waterloo, Waterloo, ON N2L 3G1, Canada
Liping Fang: Department of Systems Design Engineering, University of Waterloo, Waterloo, ON N2L 3G1, Canada
Keith W. Hipel: Department of Systems Design Engineering, University of Waterloo, Waterloo, ON N2L 3G1, Canada

Sustainability, 2018, vol. 10, issue 10, 1-16

Abstract: Centralized and decentralized procedures to assess the impacts of water demand management on a water system and its users are investigated and compared. Within the centralized approach, a system-wide optimization technique is firstly utilized to estimate the overall optimal net benefits when the water demand management initiatives are implemented. Cooperative game-theoretic methods are used to fairly redistribute the additional net benefits. In terms of the decentralized perspective, an agent-based modelling framework is adopted to permit each user to make independent decisions on whether to conserve water or consume extra water and how much to conserve or consume by solving individual optimization problems. For comparison purposes, both the centralized and decentralized approaches are applied to a case study reflecting an actual situation in the South Saskatchewan River basin in Alberta, Canada. Both methods provide positive incentives to encourage users to conserve water while maintaining at least the same level of economic benefits such that system-wide productivity is improved. Moreover, the study demonstrates that the centralized method produces greater overall net benefits, but the users may be less motivated to participate.

Keywords: water demand management; centralized and decentralized perspectives; optimization; cooperative game; bargaining; agent-based modelling; net benefits (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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