Water Policy Analysis for the Mekong River Basin

Abstract

Rapid agricultural and economic development in mainland Southeast Asia during the 1990s has fueled the demand for water resources in the Mekong River Basin. An aggregate, integrated economic-hydrologic model for the basin is developed that allows for the analysis of water allocation and use under alternative policy scenarios. The model describes the water supply situation along the river system and the water demands by the various water-using sectors. Water benefit functions are developed for the major water uses subject to a series of physical and system control constraints. Water supply and demand are balanced based on the economic objective of maximizing net benefits to water use. Results from the analytical framework indicate that although competition for Mekong water still appears to be low, there are substantial tradeoffs between in-stream and off-stream water uses. Further development and refinement of such an integrated framework of analysis can be a critical step to overcome some of the obstacles to effective management and joint cooperation in the Mekong River Basin. It could also facilitate the ongoing negotiations of detailed water allocation rules in the lower basin and thus contribute to the reasonable and equitable utilization of Mekong River waters, as envisioned in the 1995 Mekong Agreement.