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Hydro-economic river basin modelling: The application of a holistic surface-groundwater model to assess opportunity costs of water use in Spain


  • Pulido-Velazquez, Manuel
  • Andreu, Joaqui­n
  • Sahuquillo, Andrés
  • Pulido-Velazquez, David


Combined hydro-economic models of river basins are fundamental tools for assessing management and infrastructure strategies to improve the economic efficiency of water use in a context of competition over scarce water resources. Integrated hydro-economic models have to be capable to properly reproduce the physical behavior of the system, with a realistic representation of the different surface and groundwater resources, including their interaction, and the spatial and temporal variability of resource availability. On the other hand, such models must incorporate the value of water for different urban, agricultural and industrial uses and users. Economic values for water use are defined according to the marginal residual value of water for production (for agricultural and industrial uses) or the aggregated willingness-to-pay (WTP) for urban supply and other final water uses. In this paper, we present a systematic approach to estimate the marginal economic value of surface and groundwater resources at different locations within a complex water resources system. Based on a holistic conjunctive optimization model applied to the Adra river system in Spain we asses the total and marginal opportunity costs of capacity and operation constraints, including the opportunity cost of imposing environmental constraints on water use as foreseen in future Spanish water policy following the implementation of the European Water Framework Directive. The resulting opportunity costs provide important information to water managers about economic inefficiencies of current water allocation policy or infrastructure design, and about the resource opportunity costs to be considered in the design of efficient pricing policies in regions with water scarcity issues.

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  • Pulido-Velazquez, Manuel & Andreu, Joaqui­n & Sahuquillo, Andrés & Pulido-Velazquez, David, 2008. "Hydro-economic river basin modelling: The application of a holistic surface-groundwater model to assess opportunity costs of water use in Spain," Ecological Economics, Elsevier, vol. 66(1), pages 51-65, May.
  • Handle: RePEc:eee:ecolec:v:66:y:2008:i:1:p:51-65

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    References listed on IDEAS

    1. Arbues, Fernando & Garcia-Valinas, Maria Angeles & Martinez-Espineira, Roberto, 2003. "Estimation of residential water demand: a state-of-the-art review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(1), pages 81-102, March.
    2. Booker J. F. & Young R. A., 1994. "Modeling Intrastate and Interstate Markets for Colorado River Water Resources," Journal of Environmental Economics and Management, Elsevier, vol. 26(1), pages 66-87, January.
    3. James E. T. Moncur & Richard L. Pollock, 1988. "Scarcity Rents for Water: A Valuation and Pricing Model," Land Economics, University of Wisconsin Press, vol. 64(1), pages 62-72.
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    1. Corentin Girard & Jean-Daniel Rinaudo & Manuel Pulido-Velazquez & Yvan Caballero, 2015. "An interdisciplinary modelling framework for selecting adaptation measures at the river basin scale in a global change scenario," Post-Print hal-01183833, HAL.
    2. repec:eee:resene:v:51:y:2018:i:c:p:67-83 is not listed on IDEAS
    3. Dirk Rübbelke & Stefan Vögele, 2010. "Impacts of Climate Change on European Critical Infrastructures: The Case of the Power Sector," Working Papers 2010-08, BC3.
    4. Brouwer, Roy & Hofkes, Marjan, 2008. "Integrated hydro-economic modelling: Approaches, key issues and future research directions," Ecological Economics, Elsevier, vol. 66(1), pages 16-22, May.
    5. Garrido, Alberto & Novo, Paula & Rodriguez Casado, Roberto & Varela-Ortega, Consuelo, 2009. "Can virtual water 'trade' reduce water scarcity in semi-arid countries? The case of Spain," 2009 Conference, August 16-22, 2009, Beijing, China 51048, International Association of Agricultural Economists.
    6. Halkos, George, 2013. "Cost-effectiveness analysis in reducing nutrient loading in Baltic and Black Seas: A review," MPRA Paper 52296, University Library of Munich, Germany.
    7. Corentin Girard & Jean-Daniel Rinaudo & Manuel Pulido-Velazquez, 2015. "Index-Based Cost-Effectiveness Analysis vs. Least-Cost River Basin Optimization Model: Comparison in the Selection of a Programme of Measures at the River Basin Scale," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 29(11), pages 4129-4155, September.
    8. Pande, Saket & van den Boom, Bart & Savenije, Hubert H.G. & Gosain, Ashvani K., 2011. "Water valuation at basin scale with application to western India," Ecological Economics, Elsevier, vol. 70(12), pages 2416-2428.
    9. Lin, Chen, 2009. "Hybrid input-output analysis of wastewater treatment and environmental impacts: A case study for the Tokyo Metropolis," Ecological Economics, Elsevier, vol. 68(7), pages 2096-2105, May.
    10. Carlo Fezzi & Michael Hutchins & Dan Rigby & Ian J. Bateman & Paulette Posen & David Hadley, 2010. "Integrated assessment of water framework directive nitrate reduction measures," Agricultural Economics, International Association of Agricultural Economists, vol. 41(2), pages 123-134, March.
    11. Kragt, Marit Ellen, 2013. "Integrating biophysical and economic systems in a Bayesian Network Hydro-economic framework," Working Papers 153334, University of Western Australia, School of Agricultural and Resource Economics.
    12. Blanco-Gutierrez, Irene & Varela-Ortega, Consuelo & Purkey, David R., 2011. "Integrated Economic-Hydrologic Analysis Of Policy Responses To Promote Sustainable Water Use Under Changing Climatic Conditions," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114253, European Association of Agricultural Economists.

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