Centralized and Decentralized Approaches to Water Demand Management.

Centralized and decentralized procedures to assess the impacts of water demand management on a water system and its users are investigated and compared. Within the centralized approach, a system-wide optimization technique is firstly utilized to estimate the overall optimal net benefits when the water demand management initiatives are implemented. Cooperative game-theoretic methods are used to fairly redistribute the additional net benefits. In terms of the decentralized perspective, an agent-based modelling framework is adopted to permit each user to make independent decisions on whether to conserve water or consume extra water and how much to conserve or consume by solving individual optimization problems. For comparison purposes, both the centralized and decentralized approaches are applied to a case study reflecting an actual situation in the South Saskatchewan River basin in Alberta, Canada. Both methods provide positive incentives to encourage users to conserve water while maintaining at least the same level of economic benefits such that system-wide productivity is improved. Moreover, the study demonstrates that the centralized method produces greater overall net benefits, but the users may be less motivated to participate.