Abstract: Wetland water allocation based on market mechanism is an institutional innovation for the insurance of ecological water demands. A water rights trading model was constructed based on interval two-stage stochastic bi-level uncertainty programming method. We quantitatively analyzed the effect of natural wetlands’ participation on water resource system of Dagu River Basin. The results showed that the trading mechanism of natural wetlands participation reduces the environmental capacity of river sections and limits the amount of pollutant discharge and actual water consumption of industries. Under such mechanism, natural wetlands become the main buyer of water rights by purchasing water rights to meet their water demands, thereby enhancing market vitality. In contrast, the trading amount among social production users would decrease, and the planting industries would become the main seller of the social production users. This mechanism considers the ecological benefit of natural wetlands. The system benefit increases with increasing vegetation coverage. Based on the multi-criteria analysis, a vegetation coverage rate of 75% under the trading mechanism with natural wetlands participation has the best performance for water rights trading. Our results can provide a theoretical basis for natural wetlands to participate in water rights trading as main market players, providing a decision support for the coordinated optimal allocation of water resources in ecology and production use.

Key words: insurance of ecological water demand, natural wetland, market entity, water rights trading, uncertainty