Abstract
Allocation of Water Resources at the basin level is a critical issue for economic growth as well as for environmental sustainability. This study integrates network-based optimization with an Input-Output model, made available through a Spatial Decision Support System (HEAL), to support design and evaluation of water allocation policies. The innovative platform was applied to a case study using four-interlinked hydrographic basins in Northeastern of Brazil. The integrated modeling was able to measure broader socioeconomic impacts of decisions on reservoir volumes and water allocations at basin level, through indicators in a sectoral and regional scale, including ones associated with Sustainable Development Goals, such as the Water Use Efficiency (WUE) indicator. Results of the trade-offs between two scenarios, representative of the limits of performance of regulatory water instruments, were generated using the integrated modeling. They were compared with the Reference scenario for the base year (2011) and show that the economic sector most negatively affected by the regulatory instrument use is the industrial sector. Furthermore, the sugar and ethanol industry, main water users in the industrial sector (93.1% of the sector's water use) and less efficient (WUE 1.47 US$/m3 vs. 30.70 US$/m3 average of the sector) in the base year, maintain their percentage share of water use in the sector and even slightly expand it (93.2%), with slight efficiency gains (+2.3%). On the other hand, non-water-intensive industries, have their shares reduced (from 6.9 to 6.8%) and lose efficiency (−9.5%). Results of the same trade-offs by region showed that the largest proportional economic losses occur in the drier areas, damaging the economy, especially in the most industrialized municipalities with the highest GDPs. Integrated economic modeling can expand aspects involved in water security issues, assisting management by introducing socioeconomic impact measures, in a broader scale, associated with allocation decisions. Hydrological allocation criteria cannot distinguish between user efficiency and which economic sectors are using how much water. This results in economic and social losses. In water-scarce regions and with growing transfer needs, such as in the basins studied, adequate incentives, through management instruments designed based on economic theory, are essential to promote sustainable development.
Highlights
The allocation of water resources in hydrographic basins is considered a critical issue, as the viability of economic growth as well as desirable future environmental conditions depend on how water is distributed among economic sectors and the preservation of its quality
Both for the diagnosis in the base year (2011) and for the two hydrological allocation scenarios (Scenarios 1 and 2) in the model period, the storage volumes, flows and water deliveries to the users of the network could be associated to socioeconomic impacts using integrated modeling, which in turn enabled the production of regional/sectorial indicators, including ones associated with goals of the United Nation’s Sustainable Development Goals (SDGs)
The economic data used in the MIP are calibrated for the same base year (IBGE, 2007, 2011), so the socio-economic data associated with water use and the efficiency indicators generated by sector/region in the reference scenario represent the actual situation in 2011
Summary
The allocation of water resources in hydrographic basins is considered a critical issue, as the viability of economic growth as well as desirable future environmental conditions depend on how water is distributed among economic sectors and the preservation of its quality. When the economy and competition for water and the value of water grow, the benefits of reallocating water accompany this growth significantly (Rosegrant and Binswanger, 1994). This reallocation requires instruments for water management that are designed and evaluated using economic theory, with the proper analytical tools. These tools, models, and decision support systems must be capable of simulating the existing system and measuring how well the system allocates resources to impact positively on the economy, the environment, productivity, and equality. Water decision-makers need to become aware of economic models and decision supports, especially in developing countries with weak law-enforcement institutions, unbalanced political powers, uncertainties about water availability and diversity of multiple water uses (Araújo, 2020)
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