Improving adaptive capacity of social-ecological system of Tashk-Bakhtegan Lake basin to climate change effects – A methodology based on Post-Modern Portfolio Theory

Abstract

Hydrological changes due to climate change will impact the sustainability of social-ecological systems (SES). It is essential to develop methodologies, capable of addressing economic as well as the environmental aspects, to take care of the water-associated system through improving the system adaptive capacity, particularly in arid and semi-arid areas. Through the application of the Post-Modern Portfolio Theory (PMPT), we propose a new approach to water allocation problem in the face of climate change, as a case of Lake Tashk-Bakhtegan basin, Southern Iran. The economic model based on PMPT is adapted for designing water allocation schemes to maximize local economic return, minimize its risk and minimize the Gini coefficient indicative of social inequities. The climatic variables were generated by three Atmosphere-Ocean General Circulation Models. The temperature and precipitation will increase and decrease by about +2.4% and −10% on average in the future compared to those in the historical period, respectively. In order to identify hydrological and socio-economic implications of climate change in the basin, an integrated system dynamic model was developed. Finally, the decision space of equally effective solutions has been determined in the form of Pareto points at the efficient portfolio plane. The findings showed a decrease in the economic return (on average by 5.7% in the both RCPs) and the ratio of employment to unemployment (average 10% in most of sub-basin), owing to the reduction of water resources, especially in agriculture. Base on Portfolio results, the ratio of economic return to risk doubled and tripled in optimized condition compared to the normal condition in the future. The efficient plane of the portfolio can be used to allocate water to economic activities according to a risk-taking attitude of a decision-maker. Following the model results, services and industrial sectors would need to be developed in order to sustain local water resources with possible additional allocations for environmental requirements, with simultaneous improvement of economic return on water resources.