Modeling and computation of water management by real options

Zhang, Shuhua; Chang, Shuhua; Hua, Li

doi:10.3934/jimo.2017038

Cited by 4 publications

(3 citation statements)

References 33 publications

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“…Now, we are in the position to investigate that the convergence rates of u h to u as h → ∞. Let's start with the following Lemma [6,22]. Lemma 2.…”

Section: Resultsmentioning

confidence: 99%

“…Paddy field is the main part of the current irrigation areas, accounting for 47.3% of the total irrigation areas, but the only 59.6% of paddy fields can be irrigated, while only 16.4% of drylands and 19.5% of garden lands can be irrigated. The main source of irrigation water is small-scale water supply projects [6]. In the existing projects, pond reservoir is the main body of water supply, accounting for 62.3% of the total water supply capacity.…”

Section: Introductionmentioning

confidence: 99%

“…The demand for freshwater in agriculture application is growing rapidly throughout the Three Gorges Reservoir Area. Although water-saving exercises have been developed to reduce irrigation application requirements and to improve growing conditions, a lot of water is wasted because of leaking enough irrigation systems [6]. Thus, it is imperative to enhance the effectiveness of irrigation and water conservation.…”

Section: Introductionmentioning

confidence: 99%

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An Empirical Study for Real Options of Water Management in the Three Gorges Reservoir Area

Cai

et al. 2021

Sustainability

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This paper investigates an empirical evaluation of water management on agricultural irrigation. To address this problem, a real options model was proposed. This model analysis the choice of investment in water savings. Also, the model discusses a linear complementary problem that can be transformed into the inequalities of parabolic variational. By using a power penalty method, we solved the parabolic variational inequalities. The results depicted that the nonlinear parabolic equations’ solution is converges to the rate of order O(h−k2). A numerical example is given at the end of the paper to demonstrate the theoretical analysis follows from the Three Gorges Reservoir Area.

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“…Now, we are in the position to investigate that the convergence rates of u h to u as h → ∞. Let's start with the following Lemma [6,22]. Lemma 2.…”

Section: Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

An Empirical Study for Real Options of Water Management in the Three Gorges Reservoir Area

Cai

et al. 2021

Sustainability

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Comparative analysis of agricultural water pricing between Azarbaijan Provinces in Iran and the state of California in the US: A hydro-economic approach

Momeni

Zakeri

Esfandiari

et al. 2019

Agricultural Water Management

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Iranian water authority has recently announced that one of the effective ways to avoid unprecedented high water consumption in Iran's agriculture sector is to increase water price. This paper analyzes the feasibility of this policy by using a hydro-economic approach with the aim to consider the role of water pricing in agricultural water management. Such an analysis was conducted through comparing price of water consumed for producing selected agricultural crops (i.e. wheat, sugar beets, onion, tomato, barley, potato, corn, alfalfa hay and watermelon) in a case study on two provinces (East Azarbaijan and West Azarbaijan) in Iran to that in the state of California (CA) in the USA. According to the paper, the method uses the Purchasing Power Parity (PPP) Index for the first time to analyze the water prices of agricultural crops in the case study due to the specific regional circumstances in the Case Study (i.e. severe fluctuations and continuously changing currency) that prevent using the norm of Nominal Exchange Rate Index (NERI). The results show there is no significant difference between the water price for producing the selected crops in West Azarbaijan (W.AZ) and East Azarbaijan (E.AZ) provinces and that in the state of California if PPP Index is applied. Water price for producing each kilogram of some crops such as wheat, sugar beet, onion and watermelon (except potato and barley) is estimated to be between 60 to 80 percent of that in the state of California. However, this ratio is ironically equal to 116% for alfalfa hay and 105% for corn. As a result,

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Numerical simulation for European and American option of risks in climate change of Three Gorges Reservoir Area

Huang

Lin

et al. 2022

Journal of Numerical Mathematics

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With the climate change processes over times, all professions and trades in Three Gorges Reservoir Area will be influenced. One of the biggest challenges is the risk of rising sea level. In this situation, a large number of uncertainties for climate changes will be faced in Three Gorges Reservoir Area. Therefore, it is of importance to investigate the complexity of decision making on investing in the long term rising sea level risk related projects in Three Gorges Reservoir Area. This paper investigates the sea level and the temperature as the underlying assets in Three Gorges Reservoir Area. A real option model is constructed to evaluate potential sea level rising risk. We formulate European and American real option models into a linear parabolic variational inequalities and propose a power penalty approach to solve it. Then we obtain a nonlinear parabolic equation. It shows that the nonlinear parabolic equation is unique and solvable. Also, the solutions of the nonlinear parabolic equation converge to the solutions of the parabolic variational inequalities at the rate of order $\begin{array}{} \displaystyle O(\lambda^{-\frac{k}{2}}). \end{array}$ Since the analytic solution of nonlinear parabolic equation is difficult to obtain, a fitted finite volume method is developed to solve it in case of European and American options, and the convergence of the nonlinear parabolic equation is obtained. An empirical analysis is presented to illustrate our theoretical results.

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Modeling and computation of water management by real options

Cited by 4 publications

References 33 publications

An Empirical Study for Real Options of Water Management in the Three Gorges Reservoir Area

An Empirical Study for Real Options of Water Management in the Three Gorges Reservoir Area

Comparative analysis of agricultural water pricing between Azarbaijan Provinces in Iran and the state of California in the US: A hydro-economic approach

Numerical simulation for European and American option of risks in climate change of Three Gorges Reservoir Area

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