Easy Implementation of Intra-period Water Market Clearing Using CDDP Models

Abstract

Abstract-This paper shows how to clear a market for water, spatially with both consumptive and non-consumptive uses of water. A set of demand/supply nodes in a tree, radiating from a single reservoir represents a mixed-use river catchment. The multi-nodal version of the deterministic Constructive Dual Dynamic Programming (CDDP) procedure developed in this study constructs a net demand curve for water released for the reservoir which to efficiently and implicitly clears the market across all nodes in the catchment. The main advantage of the CDDP approach is that it enables us to backtrack and pick apart prices in ways that allow participants and analysts to understand why prices are, what they are, and from where the value derives.