A method for setting the term of water rights trading based on loss–benefit function

Abstract At present, water rights trading is used by many countries around the world to solve the problems of water resource shortage and uneven spatial and temporal distribution. However, there is no scientific method for setting the term of water rights trading, which is generally determined through negotiation between the trading parties. In order to find a more objective method for determining the term of water rights trading, we constructed a loss–benefit model about the term of water rights trading and solved it based on the principle of comprehensive benefits greater than zero to determine the optimal term of water rights trading. First, we analyzed the benefits and losses brought by water rights trading, then constructed a loss–benefit function with trading term as the independent variable. Second, based on the graphical analysis method, we analyzed the benefits and losses of water rights trading. Finally, the optimal term for water rights trading is determined based on the loss–benefit function and combined with a graphical analysis method. In addition, this study can also help us determine the longest or shortest water rights trading term based on actual situations.