Abstract
To this point, the smart market models have been deterministic, using one estimate of future inflows into the catchment. This chapter explores sources of uncertainty and discusses which of those the market should directly address and which it should not, why the deterministic approach may not calculate the best allocation, and ways to address uncertain inflows explicitly within the market-clearing mechanism using stochastic optimization. We will see that a stochastic optimization will probably be too hard to solve, and could complicate bidding and market clearing. We discuss some alternatives to the stochastic market model.
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Raffensperger, J.F., Milke, M.W. (2017). Water Markets in a Stochastic World. In: Smart Markets for Water Resources. Global Issues in Water Policy, vol 12. Springer, Cham. https://doi.org/10.1007/978-3-319-55008-4_11
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DOI: https://doi.org/10.1007/978-3-319-55008-4_11
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