Incorporating Water Demand Management into a Cooperative Water Allocation Framework

The impact of a water demand management plan on a water system and its users is investigated within a comprehensive cooperative water allocation framework. In particular, a demand management plan is incorporated into a two‐step multi‐period fair water allocation model. A modified cooperative game is designed for the sharing of additional net benefits under the scenario having water demand management. The results indicate that cooperation among water users can yield more net benefits, and a water demand management plan is able to lead to a further increase of the aggregated net benefits by means of water transfers from less productive users to more productive ones. By utilizing the modified cooperative game, fair sharing of additional net benefits ensures that every water user can expect to receive more net benefits and thereby water users are motivated by incentives to implement a water demand management plan which in turn improves water use efficiency. The results demonstrate that the demand management plan can be of great assistance in some arid and semi‐arid regions.