RETRACTED: Study of Water Compound Option Price (Retracted Article)

Study the water rights trade and price approach, building water market, improving the regulations of water trade and price approach in theory water will be realistic meanings to set up water rights trading in China. Applying real options to water reallocation, the concept and condition of water rights options are set up. The transaction mode breaks through restriction on time and special, realizing water resource optimized allocation, improving usage efficiency. In fact water options transfer mode is one of the water rights transfer modes. In view of characters of water rights options transaction, a compound options model is built based on unequal jump probabilities. Being a representative for the mational interest, government institutions transfer water rights to institutions, groups and individuals for a certain period. Water rights as underlying asset are used for sale and transfer. The results show that the model can define the water resource value again, help resolving the conflict between water demand and supply, set up the economizing water idea ad realize keeping on developing strategy. It has strong practical and guiding significance for governments.