A Hydro-Economic Model to Calculate the Resource Costs of Agricultural Water Use and the Economic and Environmental Impacts of Their Recovery

Francesco Sapino (), Dionisio Pérez-Blanco C.â and Pablo Saiz-Santiago
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Francesco Sapino: Department of Economics and Economic History and IME Multidisciplinary Business Institute, Universidad de Salamanca, C/Francisco Tomás y Valiente s/n, 37007 Salamanca, Spain
Dionisio Pérez-Blanco C.â: Department of Economics and Economic History and IME Multidisciplinary Business Institute, Universidad de Salamanca, C/Francisco Tomás y Valiente s/n, 37007 Salamanca, Spain†Euro-Mediterranean Center on Climate Change, RAAS Division, Via della Libertà , 12, 30121 Venezia, Italy
Pablo Saiz-Santiago: ��Duero River Basin Authority, C/Muro, 5, 47004 Valladolid, Spain

Water Economics and Policy (WEP), 2022, vol. 08, issue 04, 1-27

Abstract: In this paper, we estimate the resource costs of agricultural water use and simulate the environmental and economic impacts of their recovery. To this end, we develop a socio-hydrology-inspired, dynamic, protocol-based modular approach that interconnects economic and hydrologic modeling via two-way feedback protocols. The hydrologic module is populated with the AQUATOOL model, the Decision Support System used in Spanish river basins; while the economic module is populated with an ensemble of four Mathematical Programming Models (MPMs) that capture human agency and responses. This allows us to sample uncertainty and provide a range for resource costs estimates and the environmental and economic impacts of their recovery, rather than a point estimate. Methods are illustrated with an application to the Órbigo Catchment, a sub-basin of the Douro River Basin in Spain. Our results suggest significant resource costs (a 34–62% increase in existing charges, depending on the model) with non-trivial impacts on income (2–27% reduction) and the environment (water savings range between 6% and 69%), while the impact on tax revenue is ambiguous yet potentially significant (between −2.3 million EUR/year and 5 million EUR/year).

Keywords: Resource cost; multi-model ensemble; mathematical programming; water policy; WFD (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S2382624X22400124

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