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Abstract

Transferable Discharge Permit (TDP) programs for water quality management in river systems, which are grounded in market-oriented paradigms, are realistic approaches that produce environmental benefits. They are achieved by adhering to water quality standards along the river and economically utilizing these systems' assimilative capacity. There are few studies assessing the effects of equity on dischargers' propensity to participate in trading programs, despite the expansion of models for trading discharge permits. In this study, a simulation-optimization model with Streeter-Phelps’s equation embedded takes into account minimizing the inequity index and the system's total cost as fitness functions. The initial allotment for three distinct periods has been calculated in the first phase using the cap-and-trade program. The limitations of the water quality standards were taken into account for each time period to be applied to BOD management in one of the northern Iranian rivers. Results of the proposed methodology showed that although taking two fitness functions into account simultaneously initially results in a less cost-effective WLA, taking the equity index into account during optimization ultimately increases the discharger's consent to the inter-trading process, which lowers the system's overall cost.