Conference Agenda

Climate change has intensified the frequency of droughts in Taiwan, challenging equitable and efficient water allocation, particularly for agriculture. With increasing competition from industrial and domestic sectors, agricultural and environmental water uses are frequently marginalized, leading to production losses and ecological degradation. This study employs economic experiments to evaluate alternative water allocation mechanisms under both drought and non-drought conditions. By simulating water markets, we assess the efficiency and fairness of policies incorporating agri-environmental water values—both monetized and non-monetized—and explore the effects of subsidies on water distribution outcomes. The primary aim is to compare allocation benefits under scenarios that include or exclude environmental water considerations and to determine whether market-based mechanisms with environmental water retention can enhance resource allocation. The experimental results reveal significant differences in bidding behaviors across water user types, with monetization and subsidies improving environmental water acquisition, especially during droughts. These findings offer empirical insights into how integrating environmental water rights and incentives can promote balanced, sustainable, and socially just water management. The study provides valuable policy implications for improving Taiwan’s resilience to climate-induced water scarcity through institutional reform and water market design.