Schemes for Allocation of Benefits from Contracted Water-Saving: The Case of Irrigated Field Projects in China

Abstract

The shortage of water resources has seriously restricted the sustainable development of China’s economy. Contracted water-saving management (WSMC) has emerged as an important measure to effectively alleviate this problem. However, the rationality and fairness of benefit allocation affect the stakeholders’ enthusiasm for participating in the project. The lack of a water-saving benefit allocation scheme is one of the critical obstacles hindering the implementation and promotion of the project. This study identifies the core stakeholders in WSMC projects in Field-project in an irrigation district. Then, with comprehensive consideration of the importance, cost input, risk-taking, and effort of each participant, we examined the benefit allocation scheme in the WSMC projects of Field-project in an irrigation district by building a model based on Nash Equilibrium, Shapley value method, and modified Shapley value method. We found that the case in which the WUA E implements the WSMC project alone yields the lowest total revenue of the schemes considered, and each participant’s benefit is also at the lowest. Nash Equilibrium can achieve the maximum expected return for both participants. With the Shapley value method, the WUA E earns the largest benefits, accounting for 57.5% of total revenue, followed by the WSSE D. Under the calculation principle of the modified Shapley value model, the WUA E’s benefit decreases significantly, implying that the revenues previously earned by the WUA E are transferred to the WSSE D. This result is due to the below-average levels of importance, cost input risk-taking, and effort for WUA E in the project. It can be seen that the modified Shapley value method is more suitable for benefit allocation of the WSMC project of Field-project in an irrigation district. Finally, a typical case study in China on a shared WSMC project of Field-project in an irrigation district showed how the proposed method works. Then, we proposed policy implications for promoting project implementation from three perspectives: stakeholders, income distribution, and risk management, and identified the limitations of the research and outlined the future research directions.