Hydroeconomic modeling: the role of ecosystems in water management in the Ebro

Daniel Crespo

GREBEPM METTING

27/04/2020

This study has been financed by the projects IINA RTA2014-00050-00-00 and INIA RTA2017-00082-00-00 of the Ministry for Science and Innovation, partly financed by European ERDF funds, and by support received from the ECONATURA research group of the Government of Aragon

Outline

Crespo, D., Albiac, J., Kahil, T., Esteban, E., Baccour, S., 2019. Tradeoffs between Water Uses and Environmental Flows: A Hydroeconomic Analysis in the Ebro Basin. Water Resour Manage 33, 2301–2317. https://doi.org/10.1007/s11269-019-02254-3

• Tradeoffs between Water Uses and Environmental Flows: A Hydroeconomic Analysis in the Ebro Basin

• Integrating ecosystem benefits in hydroeconomic modeling for sustainable water allocation

Crespo, D., Albiac, J., Dinar, A., Kahil, T., Esteban, E., 2021. Integrating ecosystem benefits in hydroeconomic modeling for sustainable water allocation.

Introduction

A hydro-economic model is developed to analyze the effects of different water allocation mechanisms under combinations of water availability and environmental flow scenarios

Environmental uses have been mostly disregarded in traditional water management, but just recently the maintenance of environmental water flows is being considered as a key issue in water policies

Addressing a more sustainable management of water resources involves new policies that require improved knowledge on water allocations and benefits from the economic and environmental uses of water

This study analyzes the spatial and sectoral allocation of water resources in the Ebro Basin (Spain), in order to inform the debate on the environmental flow in the Ebro mouth

Modelling framework

Network of the Ebro Basin

Three environmental flow scenarios are simulated corresponding to the environmental restrictions established by the Ebro Basin Plan (3000 Mm³) and the two proposals of ACA (2007) and ACA (2015) being requested by the Cataluña state

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Three water allocation policies are considered to analyze the ACA (2007) and ACA (2015) proposals of environmental flow when there is water scarcity because of drought: proportional share (which is the current allocation mechanism), water markets, and priority of water use by upstream regions.

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Scenarios and policies

Ebro River flow and minimum environmental flow at the month (Mm³)

These alternative allocation policies result in very different benefit outcomes for stakeholders in downstream and upstream states. Since the downstream state (Cataluña) is asking for the huge increase of environmental flow in the mouth that is opposed by upstream states, the reasonable solution is that the bulk of the costs has to be borne by the downstream state. This solution correspond to the policy of upstream priority.

Results from scenarios

Results show that under current environmental flow of 3,000 Mm³ drougth events already generate important losses of benefits to farmers, but raising environmental flows to 5,870 Mm³ almost double the losses sustained by farmers.

Results from scenarios

The water market policy achieves higher economic benefits in the basin. The policy of proportional sharing generates higher benefits than the policy of priority of upstream regions, and it is also more equitable by distributing the drought losses evenly among regions in the basin. This is because this policy favors the irrigation districts with low profitable crops and less advanced irrigation systems. The policy of upstream priority places the burden of adjusting to drought over the downstream region of Cataluña.

Results from scenarios

Our results indicate that the proposal by Cataluña of expanding environmental flows is very costly to farmers in other states of the basin. This negative impact could be reduced somehow by the policy of upstream priority, but benefit losses remain in some cases. One possibility to gain the support of these regions is by providing payments from the Cataluña downstream state to the upstream states to compensate for any remaining losses they could sustain because of the increase of environmental flow at the Ebro mouth

Conclusions

The emerging social demands for environmental protection in the form of secured minimum environmental flows for water-dependent ecosystems and climate change impacts will further increase the competition for already scarce water resources in many basins.

Moreover, the results indicate that the policy interventions used to share the costs imposed by droughts and raising environmental flow requirements should be not only economically efficient but also socially acceptable to reduce the likelihood of failure of water reallocation to the environment.

This study evaluates the tradeoffs and political economy aspects of allocating water among economic water uses and environmental flows in water-scarce river basins that cover multiple jurisdictions. The results of this application highlight the importance of assessing the opportunity costs and political implications of reallocating water from economic activities to the environment under the impending climate change impacts.

Introduction

The increasing concern about the degradation of water-dependent ecosystems calls for considering ecosystems benefits in water management decision-making. Sustainable water management requires adequate economic and biophysical information on water systems supporting both human activities and natural ecosystems. This information is essential for assessing the social welfare of water allocation options.

This study presents the development and application of a hydroeconomic model that analyzes water allocation policies in the Ebro basin in an integrated manner under water scarcity.

The ecosystem status has been modeled and calibrated on the basis of studies relating ecosystem habitat status with stream flows in the riverbeds of the Ebro basin. Then, the ecosystem status determines the environmental benefits provided to society.

Conceptual setting: Relationship between ecosystem status and environmental benefits

Environmental benefit diagram

Example of three different WUA

Modelling environmental response and ecosystem benefits

Environmental response

Weight Usable Area (WUA) studies combine organism preferences and physical variables in the river section, resulting in the characterization of the potential habitat. The Ebro Basin Authority has used WUA studies to define environmental flows.

The WUA is a proxy for ecosystem status indicating ecosystem health

The functional form chosen to characterise ecosystem status in the Ebro is the following exponential form

Institutional cooperation: Under drought conditions, the basin authority reduces water allocations for irrigation in proportion to drought intensity (fall in inflows). Consequently, the water shortfall is shared between irrigation districts, but also reducing environmental flows. This is the policy currently applied in the Ebro basin.

Environmental institutional cooperation: Farmers receive the same allocations than under institutional cooperation, but then the basin authority purchases water from farmers for the environment in order to maximize social benefits, the sum of both private and environmental benefits. Water exchanges between irrigation districts are not allowed.

Water markets: Farmers receive the water allocations of institutional cooperation, but then these water allocations can be exchanged among irrigation districts, maximizing the private benefits of water use. There is no direct exchange of water between selling and buying irrigation districts, but rather the selling district reduces withdrawals and the buying district augments withdrawals in their respective river reaches.

Environmental water markets: Same water allocations than institutional cooperation. Water can be exchanged between irrigation districts, and also the basin authority participates in the water market by acquiring water to protect environmental benefits in river reaches. This policy enhances both private and environmental gains, so it is an appealing policy to capture the private benefits of markets while protecting ecosystems

Scenarios and policies

Results from scenarios

During droughts, institutional cooperation distributes losses to irrigation districts and the environment in proportion to water allocations in normal years. Environmental institutional cooperation enhances social benefits providing additional protection to the environment. Water markets maximize private benefits of irrigation but disregards environmental benefits, and environmental water markets deliver both private and environmental gains, capturing the private benefits of markets while protecting ecosystems.

Results from scenarios

Environmental benefits of policies under normal and drought conditions

Environmental and irrigation responses depend on spatial location, because water availability and water use intensity are heterogeneous throughout the basin. In addition, protection of environmental flows and water withdrawals generate positive and negative effects on downstream river sections. Ecosystem sensitivity, the economic value of the ecosystem services, and alternative uses of water shape environmental flows.

Results from scenarios

The challenge for water management is balancing the effects of water allocations between economic activities and environmental flows in decision-making. Market policies do not internalize the externalities generated by private water usage, and therefore interventions are needed to deal with market failures from an institutional cooperation perspective.

Conclusions

The environmental institutional cooperation policy achieves a more equitably distribution of drought shortfalls among irrigation districts and attains higher environmental protection. The institutional approach of the water authority is based on stakeholders’ cooperation and water management at basin level, and takes into account the interdependencies between sectors, regions and the environment. Cooperation among water users, administrations and other stakeholders is essential for implementing policies based on collective action. This type of policy is essential for correcting market externalities and fostering sustainable water management.

The water markets policy generates higher private benefits than the institutional cooperation policy, but attains lower environmental benefits. Irrigation districts gain from water trading but environmental benefits are overlooked. The public good characteristics of environmental flows imply that ecosystem services are externalities not accounted by water markets. The market failure has to be corrected through mechanisms dealing with these negative externalities of excessive water withdrawals.

In the environmental water markets policy, the basin authority is a trading partner buying water for the river. The sharing of water between withdrawals for economic sectors and environmental flows is based on the corresponding private and environmental benefits. Results from this “environmental” trading show that there are gains for both farmers and the environment, thus achieving higher social benefits. However, under this policy the ecosystem status improves in some river reaches but worsens in other river reaches.

Hydroeconomic modeling: the role of ecosystems in water management in the Ebro

Daniel Crespo

GREBEPM METTING

27/04/2020

This study has been financed by the projects IINA RTA2014-00050-00-00 and INIA RTA2017-00082-00-00 of the Ministry for Science and Innovation, partly financed by European ERDF funds, and by support received from the ECONATURA research group of the Government of Aragon