Abstract: In this study, elaborate regional characteristic mechanism constraints were constructed to optimize multi-objective oriented effluent trading system considering the ecological water demand guarantee. Following the main line of “simulation-mechanism-strategy”, we examined the effects of ecological water allocation and initial allocation objectives of pollutant discharge permits in Qingdao section of Dagu River Basin, aiming to clarify the optimal strategies of ecological water allocation and initial allocation objectives. The results showed that: (1) The main buyer is livestock and poultry industry in Jiaozhou, while the industrial users are sellers. (2) The total water consumption, pollution loading and system benefit are the highest under objective U (objective of high efficiency), and the lowest under objective L (objective of fairness), with active trading market. (3) With increasing ecological water allocation, water consumption, trading amount and system benefit would decrease. Effluent trading occurs in the dry year and high ecological water allocation scenario, but the system trading amount decreases. (4) Based on the TOPSIS analysis (Technique for Order Preference by Similarity to Ideal Solution), the optimal strategy is obtained, with ecological water allocation being 25% of natural runoff, and the initial allocation objective scenario being fair objective.

Key words: effluent trading, initial allocation objective, bi-level programming, ecological water demand, TOPSIS analysis