Hydro-Economic Modeling of Water Resources Management Challenges: Current Applications and Future Directions

J. Pablo Ortiz-Partida, Angel Santiago Fernandez-Bou, Mahesh Maskey, José M. Rodríguez-Flores, Josué Medellín-Azuara, Samuel Sandoval-Solis, Tatiana Ermolieva, Zoe Kanavas, Reetik Kumar Sahu, Yoshihide Wada and Taher Kahil
Additional contact information
J. Pablo Ortiz-Partida: Climate and Energy, Union of Concerned Scientists, Oakland, California, United States
Angel Santiago Fernandez-Bou: Climate and Energy, Union of Concerned Scientists, Oakland, California, United States†Water Systems Management Lab, University of California, Merced, United States‡SocioEnvironmental and Education Network, SEEN, California, United States
Mahesh Maskey: ��Water Systems Management Lab, University of California, Merced, United States
José M. Rodríguez-Flores: ��Water Systems Management Lab, University of California, Merced, United States‡SocioEnvironmental and Education Network, SEEN, California, United States
Josué Medellín-Azuara: ��Water Systems Management Lab, University of California, Merced, United States
Samuel Sandoval-Solis: �Water Management Lab, University of California, Davis, United States
Tatiana Ermolieva: �Biodiversity and Natural Resources Program, International Institute for Applied Systems Analysis, Laxenburg, Austria
Zoe Kanavas: ��Civil and Environmental Engineering Department, University of California, Davis, United States
Reetik Kumar Sahu: �Biodiversity and Natural Resources Program, International Institute for Applied Systems Analysis, Laxenburg, Austria
Yoshihide Wada: �Biodiversity and Natural Resources Program, International Institute for Applied Systems Analysis, Laxenburg, Austria
Taher Kahil: �Biodiversity and Natural Resources Program, International Institute for Applied Systems Analysis, Laxenburg, Austria

Water Economics and Policy (WEP), 2023, vol. 09, issue 01, 1-50

Abstract: Hydro-economic modeling (HEM) addresses research and policy questions from socioeconomic and biophysical perspectives under a broad range of water-related topics. Applications of HEM include economic evaluations of existing and new water projects, alternative water management actions or policies, risk assessments from hydro-climatic uncertainty (e.g., climate change), and the costs and benefits of mitigation and/or adaptation to such events. This paper reviews applications of HEM in five different categories: (1) climate change impacts and adaptation, (2) water–food–energy–ecosystems nexus management, (3) capability to link to other models, (4) innovative water management options, and (5) the ability to address and integrate uncertainty. We find that (i) the increasing complexity and heterogeneity of water resource management problems due to the growing demand and competition for water across economic sectors, (ii) limited availability and high costs of developing additional supplies, and (iii) emerging recognition and consideration of environmental water demands and value, have inspired new integrated hydro-economic problems and models to address issues of water–food–energy nexus sustainability, resilience, reliability through water (re)allocation based on the relative “value†of water uses. In the past decade, the field of HEM has improved the integration of ecosystem needs, but their representation is still insufficient and mostly ineffective. HEM studies address how to sustainably manage water resources, including groundwater which has become an area of particular interest in climate change adaptation. The current most used spatial and temporal resolutions (basin-scale and yearly time-step) are appropriate for planning but not for operational decisions and could be underestimating impacts from extreme events (e.g., flood risk) captured only by sub-monthly time scales. In addition, HEM primarily focuses on biophysical and economic indicators but often overlooks preferences and perspectives of stakeholders. Lastly, HEM has been widely used to analyze transboundary cooperation, showing benefits for increasing water security and economic development, particularly as climate change develops. We conclude that the field of HEM would benefit from developing more operational models and enhancing the integration of commonly neglected variables, such as social equity components, ecosystem requirements, and water quality.

Keywords: Hydro-economic modeling; water policy; global climate change; water–food–energy–ecosystems nexus (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1142/S2382624X23400039

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