Open-source smart market algorithm reduces water trading costs and improves allocation under regulatory constraints.
This research highlight introduces Open Water Trade, an open-source smart market clearing algorithm designed specifically for water trading. Water markets can reduce the impacts of water scarcity by reallocating water between users, but high transaction costs and regulatory complexity often prevent beneficial trades. Open Water Trade automates buyer–seller matching through a double auction algorithm that maximizes gains from trade while incorporating regulatory constraints such as limits within river reaches.
The tool builds on intellectual property developed by ERA Economics and was expanded in collaboration with Washington State University and the State of Washington Water Research Center through the Technology for Trade project. Unlike prior proprietary systems, this framework is fully open source and will be hosted in a public code repository following peer review. The algorithm supports research, education, and policy analysis and can be integrated into modeling, behavioral experiments, or real-world market design to improve water allocation under increasing scarcity.
This work was supported by the USDA National Institute of Food and Agriculture, project #1016467.
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Authors
Ronspies, R., Howitt, R., Young, R., Brozović, N., and Yoder, J.
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Suggested Citation
Ronspies, B., Howitt, R., Young, R., Brozović, N., Yoder, J. 2023. Open Water Trade: An Open-Source Smart Market for Water. Technology for Trade Research Highlight. Washington State University, Pullman, WA.
Year Published
2024
Areas of Focus
Agricultural Technology and Water Resources & Policy
Topics
Production Systems and Water Resources
