Abstract
Abstract. Water infrastructure investment planning must consider the interdependencies within the water–energy–food nexus. Moreover, uncertain future climate, evolving socio-economic context, and stakeholders with conflicting interests, lead to a highly complex decision problem. Therefore, there is a need for decision support tools to objectively determine the value of investments, considering the impacts on different groups of actors, and the risks linked to uncertainties. We present a new open-source hydro-economic optimization model, incorporating in a holistic framework, representations of the water, agriculture, and power systems. The model represents the joint development of nexus-related infrastructure and policies and evaluates their economic impact, as well as the risks linked to uncertainties in future climate and socio-economic development. We apply the methodology in the Zambezi River basin, a major African basin shared by eight countries, in which multiple investment opportunities exist, including new hydropower plants, new or resized reservoirs, development of irrigation agriculture, and investments into the power grid. We show that it is crucial to consider the links between the different systems when evaluating the impacts of climate change and socio-economic development, which will ultimately influence investment decisions. We find that climate change could induce economic losses of up to USD 2.3 billion per year in the current system. We show that the value of the hydropower development plan is sensitive to future fuel prices, carbon pricing policies, the capital cost of solar technologies, and climate change. Similarly, we show that the value of the irrigation development plan is sensitive to the evolution of crop yields, world market crop prices, and climate change. Finally, we evaluate the opportunity costs of restoring the natural floods in the Zambezi Delta; we find limited economic trade-offs under the current climate, but major trade-offs with irrigation and hydropower generation under the driest climate change scenario.
Highlights
Having established integrated water resources management plans, many countries and river basins around the world are planning to formulate water infrastructure development plans
The decision support tool can be used as a discussion platform for stakeholders, answering questions such as “What are the economic impacts of the projects on producers and consumers of crops, energy, and water?”, “What if available water resources are reduced because of climate change in the future?”, or “How robust is a plan considering uncertainties in socio-economic development?”
We refer to the “hydropower development plan” or “HDP” as the ensemble of projects described in World Bank (2010), which includes 15 projects with 7.2 GW of new operating capacity (Fig. 5, Table 2)
Summary
Having established integrated water resources management plans, many countries and river basins around the world are planning to formulate water infrastructure development plans. Infrastructure investments will contribute to multiple Sustainable Development Goals (UN General Assembly, 2015), such as “No Poverty” (1), “Zero Hunger” (2), “Clean water and sanitation” (6), “Affordable and clean energy” (7), “Decent work and economic growth” (8), and “Climate action” (13) Formulating these investment plans is a complex process involving competing objectives, upstream–downstream trade-offs, interactions between investments, multiple stakeholders, and uncertainty related to socio-economic changes and future climate. Hydro-economic optimization models (HOM) have developed into potential decision support tools for basin-scale water resources management over the past decade (see reviews by Bauer-Gottwein et al, 2017 and Harou et al, 2009). They have been used to analyse water infrastructure investments, reservoir release scheduling, and transboundary resources sharing problems.
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