Revenue Distribution Of Water-saving Management Contract Based On Principal-agent Theory

In recent years,with the in-depth development of China’s industrialization and urbanization,the shortage of water resources has become one of the main factors affecting economic and social development.Water-Saving Management Contract(WSMC)is a water-saving service mechanism.Water user and water-saving service company sign contracts for water-saving project and share the water-saving benefits.The promotion of WSMC is not only conducive to saving water resources and obtaining social benefits,but also bringing economic benefits to water user and water-saving service company.How to distribute the revenue in WSMC is a problem that needs to be solved urgently.Firstly,based on the multi-task principal-agent theory,a model is proposed to deal with how water user can set reasonable and effective incentive coefficients to improve the effort levels of water-saving service company.The goal of the model is to maximize the total revenue of water user and water-saving service company.The different stimulations are given for three relationships between the efforts cost of the two tasks.If the effort costs of the two tasks are independent of each other,the stimulation for water saving will not affect the stimulation for renovation costs.If the effort costs of the two tasks are complementary and the water saving is stimulated,it will also promote the incentive for saving renovation costs.If the effort costs of the two tasks are substitutive,the water saving service company will only focus on water saving and ignore the saving of renovation costs with the increasing for water saving.Secondly,to encourage water-saving service company to work hard to increase water-savings,the reputation effect is introduced.Two-period dynamic principal-agent model combining explicit incentives,external reputation effects and internal reputation effects are constructed.The influences of external reputation effect and double reputation effect on the revenue distribution of WSMC are analyzed.The results show that the external reputation effect can only affect the short-term incentives of the water-saving service company in the first phase.The double reputation effect can affect the continuous incentives of the water-saving service company in the two phases.The water-saving service company is prompted to work hard and increase the water-saving revenue of the WSMC.For the Shared Water-Saving Model,this thesis analyzes the revenue distribution of water user and water-saving service company and proposes relevant incentive measures in WSMC.It provides theoretical supports for the further promotion of WSMC and the realization of a water-saving society.