*6.3. Peer-to-Peer Markets and Cost-Benefit Analysis*

Criticisms of Haddad's early depiction of micro-trading [46] argued that households may not have the expertise, interest, or time to trade water [47]. Haddad argued that households regularly make complex decisions around finances and could readily bid on water prices [48]. A smart water grid would involve transaction costs and costs associated with rainwater tanks and smart meters, creating considerable economic barriers. Research around a peer-to-peer energy trading market found that households were engaged in bidding on energy, but they became disengaged due to the structure of transaction costs that created market inefficiency [8]. The buy-in for consumers to invest in rainwater cisterns and pumps could contribute to challenges in implementing a smart grid, as researchers have demonstrated that the payback period of rainwater harvesting systems alone can be 20–30 years [31,98]. Water resources are projected to become increasingly scarce [1], however, and a study conducted in India suggests that people, particularly in drought-prone areas, may be willing to invest in rainwater harvesting systems or other creative and environmentally-friendly water alternatives [99]. As described above, rainwater harvesting alone provides an intermittent source of water, and the cost-benefit analysis of purchasing a rainwater harvesting tank and pump to join a smart grid would be altered, because participants are granted access to continuous water supply. It is expected that micro-trading could function as an efficient market in a water-scarce urban environment. Further analysis is needed to explore the cost and benefits associated with the economics of the infrastructure and participation in the water market. The agent-based model can be extended in further research to capture economic decisions of households to join the market and to buy and sell water. New modeling mechanisms can be included in the framework to capture the interplay among demands, climate, trading adaptations, and infrastructure performance.

## *6.4. Water Quality*

Water reuse programs have historically been challenged in garnering public support, due to the "yuck factor", or perception that treated wastewater is dirty or unsafe [100,101]. Water quality of water withdrawn through the smart water grid should be managed to mitigate public health risks and enhance positive perceptions of water quality. The quality of rainwater is generally accepted as high enough for irrigation and toilet flushing, especially when first flushing is used to remove contaminants that are washed off of roofs [38,83]. The quality of harvested water is expected to degrade, however, as the water moves through a pipe network and is stored in a tank. We include a first flush diversion that would improve the quality of water entering the network, but further research is needed to better represent the quality of water that is pumped from rainwater harvesting tanks and the fate and transport of contaminants in the network. Filtration and treatment systems can be installed at the point-of-entry, and research is needed to explore how to enhance household expertise in the operation and maintenance of treatment technology. For example, new research explores how real time control of the operation of biofilters can improve microbial removal from stormwater [102].
