A Study On Pricing Of Water Resource Supply Chain Of Eastern Route Of South-to-North Water Transfers

Water pricing is one of key issues of Eastern Route of South-to-North Water Transfer Project. Classical studies of water pricing limit on the aspects of project and economy but neglect coordination of suppliers and the demanders, so it is necessary to study the water pricing theory based on water rights transaction in market economy. According to system engineering, Game theory and Supply Chain Theory, the pricing theory of water is formed to adopt to the new environment of the South-to-North Water Transfer Project (SNWT for short in the following). Supply Chain Management Theory applied to SNWT is a new field of transferred water pricing theory and this theory has a cheerful prospect both in theory and methodology.The paper integrates the suppliers and demanders as a whole based on Supply Chain Theory, defines the main agents of water rights transaction of Eastern Route and designs the three-layers seamless supply chain. It sets up a fixed price theory based on cooperative game, and extends the research on water price regarding to SNWT into the operational stage.This paper analyzes the essence, the object and the principle of the pricing of Eastern Route of SNWT under the cooperative game theory. From the view point of finance and engineering, the cost elements and influence factors are analyzed. Further more, the model of cost allocation is established, the operation procedures is designed. Then this model is compared with traditional cost allocation model through the case study.The paper also builds up dynamic pricing model of three levels based on cooperative game theory. It demonstrates that the supply chain nodes are favored more profits in the game of corporation than non-cooperative of Stackelberg dynamic game. According to the characteristics of the nodes in each layer, the extended model is simulated under the restricts of seven factors, such as two-part tariff, upper price limit, profit allocation and so on. Then given some pricing strategies for each node.Finally, through the analysis of the pricing risk of Eastern Route supply chain of SNWT, the paper builds up an option model with water option, long-term contract and exchangeable contract to adverse risk. This model analyzes the profit change of suppliers and customers by using financial derivatives and finds out it can be used to adverse price risk of Eastern Route of SNWT effectively.