Water resource allocation aimed at sustainable watershed development suffers from prominent challenges such as water pollution and scarcity, especially in water-deprived regions. Based on analysis of water quality, use, and sectoral demands during the planning period in the Fenhe River Basin, an improved inexact two-stage stochastic programming model with downside risk control was built for optimal resource allocations for the four primary sectors (industry, domestic use, agriculture, and the environment) in the basin. The principal constraints are river water quality and available water resources under the three hydrological scenarios (low, medium, and high). The results show that industrial, domestic, and agricultural water use in the middle and lower reaches were significantly reduced by requiring improved water quality; agriculture suffered the greatest water shortage and risk. As the level of risk control improved, the comprehensive watershed benefits and agricultural risks were gradually reduced. Improving water reuse significantly reduces the risk and increases the benefits. The model can effectively manage rational water allocations under the dual constraints of water quality and quantity, meanwhile alleviating water competition caused by different water benefits to provide support for coordinating the improvement of water quality and socio-economic development in the basin.
Equilibrium investment and risk control for an insurer with non-Markovian regime-switching and no-shorting constraints
