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

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).