On Methods of Water Rights Original Allocation and Reallocation

An entire water rights system includes the original allocation mechanism and the reallocation mechanism. In this paper a method used for original allocation based on two-stage dynamic game model is put forward. Using this method the optimal allocation scheme can be obtained by seeking the Selten Equilibrium and an example is provided to illustrate the idea of the method. For water rights reallocation a "timeouts market" method is put forward and its Pareto improvement is analyzed by Nash Bargaining Theorem. The conclusion is that those two methods, which make up an entire water rights system and overcome the disadvantages of both the administrative plan and the completely free market, are feasible to promote the efficiency of water resources utilization.