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

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 - k 2 ) . A numerical example is given at the end of the paper to demonstrate the theoretical analysis follows from the Three Gorges Reservoir Area.