Efficient Water Allocation Research Articles

Water Rights and Human Rights: The Poor Will not Need Our Charity if We Need Their Water

Each year, about 2.8 million people die due to problems with poor water supply, sanitation and hygiene. Over three-quarters of the dead are children. Some argue that a human right to clean water would improve this situation. This paper shows that human rights are not sufficient to improve access to clean water and argues that it would be more productive to distribute property rights in national waters to citizens. Because property rights --- unlike human rights --- are alienable, citizens (rich and poor) could turn some of their rights into cash that they could use to pay for clean water service. Besides this basic equity outcome, property rights would establish a price of water in proportion to its value and facilitate efficient water allocation.

An empirical assessment of the value of irrigation water: the case study of Murrumbidgee catchment*

Evaluation of value of irrigation water is essential for supporting policy decision making relating to investments in the irrigation sector, efficient allocation of irrigation water and water pricing and for crafting policies to compare the variable impacts of water reform within and across sectors of the economy. This paper asks the question of how much an established irrigator would pay for water and at what price farmers planning to expand the area they have under irrigation would consider paying for the right to access water. An analytical framework is developed to estimate the net present value of both annual and perennial agricultural activities in the Murrumbidgee catchment. Using these estimates the total value of water used in Murrumbidgee catchment is estimated. An aggregate water supply curve is derived for the catchment from where water may be acquired from irrigators for environmental flows.

Fair Agreements for Sharing International Rivers with Multiple Springs and Externalities

In this paper we consider the problem of sharing water from a river among a group of agents (countries, cities, firms) located along the river. The benefit of each agent depends on the amount of water consumed by the agent. An allocation of the water among the agents is efficient when it maximizes the total benefits. To sustain an efficient water allocation, the agents can compensate each other by paying monetary transfers. Every water allocation and transfer schedule yields a welfare distribution, where the utility of an agent is equal to its benefit from the water consumption plus its monetary transfer (which can be negative). The problem of finding a fair welfare distribution can be modelled by a cooperative game. For a river with one spring and increasing benefit functions, Ambec and Sprumont (2002) propose the downstream incremental solution as the unique welfare distribution that is core-stable and satisfies the condition that no agent gets a utility payoff above its aspiration level. Ambec and Ehlers (2008) generalized the Ambec and Sprumont river game to river situations with satiable agents, i.e., the benefit function is decreasing beyond some satiation point. In such situations externalities appear, yielding a cooperative game in partition function form. In this paper we consider river situations with satiable agents and with multiple springs. For this type of river systems we propose the class of so-called weighted hierarchical solutions as the class of solutions satisfying several principles to be taken into account for solving water disputes. When every agent has an increasing benefit function (no externalities) then every weighted hierarchical solution is core-stable. In ca! se of satiation points, it appears that every weighted hierarchical solution is independent of the externalities.

Abstracts of Award‐Winning Theses

Abstracts of Award‐Winning Theses

Development of a Dynamic Long-Term Water Allocation Model for Agriculture and Industry Water Demands

Demands growth and water resources limitation, enforce water sector policy makers to integrate water supply–demand interactions in a coherent framework for efficient water allocation. Water supply–demand interaction, changes long-term trend of water demands, which in turn has a substantial influence on water allocation. Researches on water allocation modeling lack adequate projection of relationship between water supply and demand. Socio-economic factors representing water allocation stakeholders’ benefits, account for the main share of water supply–demand interaction. Identification, representation and consideration of these factors in a water allocation model, is the main limitation of researches on this issue. In this paper a new long-term water allocation model at basin level is developed and introduced. This model considers water supply–demand interaction in agriculture and industry sectors, by use of socio-economic parameters; such as, production, cultivated land area, revenue and employment. The model main advantage is its ability to reflect the interrelationship between essential hydro-system and supply–demand components. It can explore both socio-economic and water allocation consequences of various policy choices. The model is used to assess two different development policies at basin level. The first one is fourth 5-year development plan of Iran, which fixes predefined growth rate for different sectors. The second one assumes the present state continues up to the end of planning horizon. A typical multi-reservoir water basin is modeled and analyzed for two policies. Indices that summarize long-term state of hydro-system and stakeholders are defined and used in policies assessment and decision making. Results of these assessments show fourth 5-year development policy provides opportunities for substantial improvement in water allocation and stakeholders’ benefits.

Removing barriers to facilitate efficient water markets in the Murray-Darling Basin of Australia

We discuss the role and characteristics of water markets in Australia in facilitating efficient water allocation. Administrative, regulatory and/or political barriers to effective functioning of water markets are reviewed with a focus on the southern Murray-Darling Basin (MDB) region of Australia. A mathematical model is developed to estimate the costs of existing restrictions and the benefits from potential changes in water markets (e.g., removing barriers in temporary water markets). The modelling results reveal that expanding trade leads to an increase in mean annual net returns from AU $2502 million to AU $2590 million (i.e., an increase of AU $88 million). When the current volume restrictions, exchange rates, and trading charges are accounted for, mean annual net returns reduced from AU $2590 million to AU $2573 million (i.e., a reduction of AU $17 million). The exclusion of any of the three southern MDB states from the interstate water trading imposes significant costs. If South Australia, New South Wales or Victoria withdraws from the water market, net returns are reduced by AU $27 million, AU $31 million and $63 million, respectively. The paper outlines the policy implications of strategies to remove market barriers and to facilitate efficient and effective water trading.

Markets - Water Markets: Australia's Murray-Darling Basin and the US Southwest

Worldwide supplies of fresh water are increasingly scarce relative to demand. This problem is likely to be exacerbated with climate change. In this paper, we examine water markets in both Australia’s Murray Darling Basin and the western US and their prospects for addressing water scarcity. The two regions share a number of important similarities including: climate variability that requires investment in reservoirs to make water available in low-rainfall periods; the need for internal and cross-border (state) water management; an historical major allocation of water to irrigators; increasing competition among different uses (agricultural, environmental and recreational in situ uses, urban demand); and the potential for water trading to more smoothly and quickly allocate water across these competing uses. A comparison of the two regions provides important insights about how economic factors can encourage more efficient water allocation, market structure and government regulation.

Analyzing the Effects of Water and Agriculture Policy Strategies: An Iranian experience

Problem statement: Because of growing demand for water resources, increasing cost of supplying water and overdraft of underground waters, economists suggest water pricing policy to improve water allocation efficiency in Iran. While due to political risk, economic and cultural concerns, government tends to reject that advice. This study addressed questions of what policy alternatives to water pricing could be used to improve irrigation water allocation efficiency. Approach: Three policy options include water pricing, water complementary input factor taxes and output taxes were examined. In order to minimize the problems of bias produced by fully aggregated models, sample farms were classified into homogeneous groups of farmers by means of clustering technique. The analysis carried out by means of Positive Mathematical Programming (PMP), utilizing quadratic cost functions. Results: Results showed that effects of alternative policies were strongly dependent on group of farmers and that would create widespread effects on policy goals across clusters. The results also indicated that water pricing policy worked well in reducing the irrigation water use when the water price level was high and will have, in most cases, higher effects than other policy scenarios. Conclusion: Low level of input taxation wasn't a good driver in decreasing irrigation water demand and keeping the welfare level. Water pricing and output tax policies were better suited and effective than water complementary input factor taxation but both input factor tax and output tax policy at certain rates could be alternatives to water pricing policy. Water pricing policy had noticeable effects on social and environmental goals, while input and output taxes had small effects on that goals.

Irrigation Water Value at Small-scale Schemes: Evidence from the North West Province, South Africa

Insight into the value of water is essential to support policy decision making about investments in the water sector, efficient allocation of water and water pricing. However, information on irrigation water values at small-scale schemes is scarce and in general little attention is paid to the determinants of these values. In this study values are calculated for small-scale irrigation schemes in the North West Province of South Africa, using the residual imputation method. An average water value of US$0.188/m3, in line with expectations for vegetable crops, was found. Furthermore, the crop choice and the irrigation scheme design and institutional setting were shown to significantly influence the water value, whilst individual characteristics of farmers proved to be less important.

A new approach to design energy efficient water allocation networks

An energy efficient water allocation network is designed more easily by solving the sequential mathematical model than the simultaneous mathematical model. But in existing sequential models, the interactions between the design of a water allocation network and design of a heat exchanger network have not been fully taken into account. To consider the energy performance during synthesizing water allocation networks, in this paper, firstly, the reason why different water allocation networks have different energy performance is analyzed. It is found that reducing the number of temperature local fluctuations along the sub-streams in water allocation networks is beneficial for energy performance of the system. There are two methods to reduce the number of temperature local fluctuations, one is to reduce the unnecessary flows of water in the networks, the other is to reduce the number of sub-stream temperature peaks or vales. By considering the two methods, a new mathematical model only concerning water allocation networks is presented and the resultant networks feature good energy performance.

Basin-wide cooperative water resources allocation

The Cooperative Water Allocation Model (CWAM) is designed within a general mathematical programming framework for modeling equitable and efficient water allocation among competing users at the basin level and applied to a large-scale water allocation problem in the South Saskatchewan River Basin located in southern Alberta, Canada. This comprehensive model consists of two main steps: initial water rights allocation and subsequent water and net benefits reallocation. Two mathematical programming approaches, called the priority-based maximal multiperiod network flow (PMMNF) method and the lexicographic minimax water shortage ratios (LMWSR) technique, are developed for use in the first step. Cooperative game theoretic approaches are utilized to investigate how the net benefits can be fairly reallocated to achieve optimal economic reallocation of water resources in the second step. The application of this methodology to the South Saskatchewan River Basin shows that CWAM can be utilized as a tool for promoting the understanding and cooperation of water users to achieve maximum welfare in a river basin and minimize the potential damage caused by water shortages, through water rights allocation, and water and net benefit transfers among water users under a regulated water market or administrative allocation mechanism.

A Coasian Approach to Efficient Water Allocation of a Transboundary River

The United States and Mexico recently resolved a decade-old water dispute that required Mexico to repay the accumulated water debt within one year. A Coasian analysis estimates the social welfare gains attainable to each country under an alternative debt repayment scheme that allows repayment over a longer time horizon and in a combination of dollars and water, instead of solely in water. Assuming average water supply conditions, under the agreed 1-year repayment contract, U.S. compensation value is 534% greater and Mexico's compensation cost is 60% less relative to when compensation is paid exclusively in water.

Residential water demand model under block rate pricing: A case study of Beijing, China

In many cities, the inconsistency between water supply and water demand has become a critical problem because of deteriorating water shortage and increasing water demand. Uniform price of residential water cannot promote the efficient water allocation. In China, block water price will be put into practice in the future, but the outcome of such regulation measure is unpredictable without theory support. In this paper, the residential water is classified by the volume of water usage based on economic rules and block water is considered as different kinds of goods. A model based on extended linear expenditure system (ELES) is constructed to simulate the relationship between block water price and water demand, which provide theoretical support for the decision-makers. Finally, the proposed model is used to simulate residential water demand under block rate pricing in Beijing.

Multicriteria decision-making for efficient water and land resources allocation in irrigated agriculture

The irrational use of water in agriculture is often responsible for several problems concerning the depletion and/or the pollution of water resources. In these cases specific policy measures should be taken to protect water resources from harmful agricultural activities, mitigating at the same time their potential impact on farmers’ welfare. To this end, a multicriteria decision-making model is formulated that aims at allocating efficiently water and land resources in a rural area of Greece, by optimizing a set of important socio-economic and environmental objectives. According to the model’s output, past and current decisions on irrigated agriculture turned out to be oriented towards meeting exclusively the socio-economic objectives. Yet, there are several other possible allocations schemes that could be applied in order to improve the performance of environmental indicators and to contribute to a more sustainable use of natural resources. Moreover, the decision-making model can be further employed to assess a number of additional policy measures in irrigated agriculture. In this framework, the outcome of imposing various water pricing policies was evaluated. The efficiency of these policies was found tightly connected to the elasticity of water demand. Namely, higher elasticity seems to enhance the flexibility in resource allocation and the movement towards environmental objectives.

Triple dividends of water consumption charges in South Africa

The South African government is exploring ways to address water scarcity problems by introducing a water resource management charge on the quantity of water used in sectors such as irrigated agriculture, mining, and forestry. It is expected that a more efficient water allocation, lower use, and a positive impact on poverty can be achieved. This paper reports on the validity of these claims by applying a computable general equilibrium model to analyze the triple dividend of water consumption charges in South Africa: reduced water use, more rapid economic growth, and a more equal income distribution. It is shown that an appropriate budget‐neutral combination of water charges, particularly on irrigated agriculture and coal mining, and reduced indirect taxes, particularly on food, would yield triple dividends, that is, less water use, more growth, and less poverty.

Using system dynamics to model water-reallocation

Improving the efficiency of water allocation has long been recognised as a key problem for the water resources management decision-makers. However, assessing the efficacy of management decision is difficult due to the complexity and interconnectivity of water resource systems. For this reason, it is vital that robust modelling approaches are employed to deal with the feedback loops inherent in the water resource systems. Whilst many studies have applied modelling to various aspects of water resource management, little attention has been given to innovations in modelling approaches to deal with the modelling challenges associated with improving decision-making. The aim of this study is to apply a System Dynamics modelling approach to improve the efficiency of water allocation incorporating a myriad of irrigation system constraints. The system dynamic approach allows the different system components to be organised as a collection of discrete objects that incorporate data, structure and function to generate complex system behaviour. Through the application of a system dynamic approach, a robust model (named the Economical Reallocating Water Model (ERWM)) was developed which was used to examine the options of re-allocating water resources that minimize the water cost all over an irrigated agricultural area. The ERWM incorporated a wide range of complexities likely to be encountered in water resource management: surface and ground water sources, water trading between sources, system constraint such as maximum ground water pumping, rates, maximum

Analysing the Diversity of Water Pricing Structures: The Case of France

This paper presents the results of a 2003 national survey of urban water pricing structure implemented by 429 district level water utilities. After providing some background elements on the diversity of existing water pricing structures, the paper shows how each structure can be used to achieve different management objectives (water allocation efficiency, costs recovery, and equity). It then describes the structures adopted by French water utilities, showing that flat rate are rarely adopted; declining blocks frequently used; and increasing blocks pricing which should be used to promote water use efficiency remain extremely rare. A statistical clustering is then conducted and a typology of situations elaborated. The paper concludes with highlighting that current pricing structures are influenced by past practices and that the dominant objective of water utilities is to cover costs.

Policy Options to Improve Water Allocation Efficiency: Analysis on Egypt and Morocco

Because of political risk, economic feasibility, and cultural concerns, it has been a great challenge for economists to provide palatable remedies to governments to promote water allocation efficiency. Considering the limitation of water pricing to irrigation water, this research addresses questions of which strategic policy alternatives to water pricing might improve irrigation water allocation efficiency. An empirical framework is provided to compare irrigation policies for allocating scarce water to agricultural production in Egypt and Morocco. Partial-equilibrium agricultural sector models specific to Egypt and Morocco were employed for policy tests. Consumer and producer surplus from agricultural based commodities is maximized subject to various resources, technical, and policy constraints. Positive Mathematical Programming (PMP) was used to calibrate the model. Water pricing policy, water complementary input factor tax policy, and output tax policy are tested using these two agricultural sector models. Results suggest that effective policy depends on the social, economic, and environmental contexts of specific regions. For countries like Egypt where most agricultural land is irrigated, taxes on Nitrogen (N) fertilizer and energy and output tax on water-intensive and low profit crop production may be more effective than others. For the Moroccan case, taxation on crop inputs and outputs not only affect water use in the public irrigation sector, but also private irrigation sector and rain-fed as a whole. Water pricing and output tax policies are better suited and effective than water complementary input factor taxation. Findings from Morocco might be generalized to other countries with similar irrigation characteristics and diversity in irrigated (public and private) and rain-fed land. The results for both countries demonstrate that some of the strategic irrigation policies can work towards directing cropping decisions to less water intensive crops and also generating revenues for governments in situations where governments choose not to price water.

The potential impact of markets for irrigation water in Italy and Spain: a comparison of two study areas*

The viability of irrigated systems in Southern Europe is closely linked to efficient institutional settings and water‐allocation mechanisms. A significant, although not widely used, mechanism for water allocation is an intra‐sectorial water market. The objective of this paper is to evaluate to what extent water markets may contribute to the improvement of the efficiency of water allocation and to the profitability of irrigated agriculture. The related issues of water allocation among farm types and farm specialisation are also addressed. The analysis is based on a basin‐level linear programming model, comparing the situation with and without a market. It includes both fixed and variable transaction costs and estimates their combined effects on market performances. The model is applied in two areas in Southern Italy and Spain, and simulates the behaviour of different farm types, derived from cluster analysis on a sample of farms in each area. The paper confirms that water markets could potentially improve the economic efficiency of water use, in terms of higher profit per hectare, given limited water availability. The potential improvements are associated with a more intense specialisation of farms and are strongly differentiated among farmers, particularly where significant restrictions to water availability occur. This corroborates the expectations of institutional difficulties in implementing water markets. However, the exchanges, and consequently the potential effects of water markets, are heavily affected by the actual level of water availability, as well as the size and the structure (fixed vs. proportional) of transaction costs. The paper calls for a more in‐depth analysis of the connections between market performances and institutional settings, as related to the issue of water‐agriculture policy design and coordination.

The US freshwater supply shortage: Experiences with desalination as part of the solution

Parts of the USA are facing impending shortages of freshwater. One proposed solution is the construction of desalination plants to turn seawater into freshwater. Although seawater desalination plants are widely used in the Middle East, especially Saudi Arabia, there are few desalination plants in the USA. In 2003, Tampa Bay Water built the largest desalination plant in North America. Persistent operating problems and escalating costs have caused the utility to re-evaluate its reliance on the seawater desalination plant as part of a long-term regional water supply strategy. In addition, environmental effects of the plant are uncertain. Advances in reverse osmosis technology have significantly reduced desalination costs. However, desalination of seawater is still more expensive than other freshwater supply sources and demand management measures. With time and research, seawater desalination may prove to be a sustainable, cost-effective source of new freshwater supplies, especially if plants are coupled with renewable energy sources. Until then, the development of small-scale groundwater desalination plants, the re-use of water, water conservation, and a more efficient allocation of water through higher prices and rising block rates will be important strategies in meeting growing water demand. Moreover, it is important to improve the coordination between water supply planning and land use planning as populations continue to increase.