Although the temporal transferability of input–output (IO) models has been examined before, no study has investigated the impacts of changing water availability conditions over time, e.g., due to climate change, on the predictive power of water-inclusive IO models. To address this gap, we investigate the performance of inter-regional supply-side input–output (ISIO) models that incorporate precipitation and water intake under varying climates over time in a transboundary water management context. Using the Saskatchewan River Basin in Western Canada as a case study, we develop four ISIO models based on available economic and hydrological data from years with different climatic conditions, i.e., two dry and two wet years. Accounting for price changes over these years, our findings indicate that the joint impact of changes in water availability and economic structural changes on economic output can be considerable. The results furthermore show that each model performs particularly well in predicting the economic output for similar climatic years. The models remain reliable in predicting economic outputs over several years as long as changes in water availability are within the range observed in the water-inclusive base year ISIO model.

Although the temporal transferability of input–output (IO) models has been examined before, no study has investigated the impacts of changing water availability conditions over time, e.g., due to climate change, on the predictive power of water-inclusive IO models. To address this gap, we investigate the performance of inter-regional supply-side input–output (ISIO) models that incorporate precipitation and water intake under varying climates over time in a transboundary water management context. Using the Saskatchewan River Basin in Western Canada as a case study, we develop four ISIO models based on available economic and hydrological data from years with different climatic conditions, i.e., two dry and two wet years. Accounting for price changes over these years, our findings indicate that the joint impact of changes in water availability and economic structural changes on economic output can be considerable. The results furthermore show that each model performs particularly well in predicting the economic output for similar climatic years. The models remain reliable in predicting economic outputs over several years as long as changes in water availability are within the range observed in the water-inclusive base year ISIO model.

A comprehensive review of experiences with water quality trading (WQT) programs worldwide is presented, spanning altogether more than 4 decades. A new WQT database is built, extracting data and information from existing review papers, complemented with gray and published literature about individual trading programs. Key aspects that affect trading volumes and program continuation are identified and categorized. No single success or fail factor emerges from this review, typically a mix of factors play a role. There is potential for WQT to evolve further and serve as a cost-effective pollution control instrument, but this requires nudging political will to regulate nonpoint source.

A comprehensive review of experiences with water quality trading (WQT) programs worldwide is presented, spanning altogether more than 4 decades. A new WQT database is built, extracting data and information from existing review papers, complemented with gray and published literature about individual trading programs. Key aspects that affect trading volumes and program continuation are identified and categorized. No single success or fail factor emerges from this review, typically a mix of factors play a role. There is potential for WQT to evolve further and serve as a cost-effective pollution control instrument, but this requires nudging political will to regulate nonpoint source.

Abstract The objective of this study is to identify the optimal spatial distribution of Best Management Practices (BMPs) to reduce total phosphorus (TP) runoff from agricultural land in the largest Canadian watershed draining into Lake Erie, the Great Lake most vulnerable to eutrophication. BMP measures include reduced fertilizer application, cover crops, buffer strips, and the restoration of wetlands. Environmental SWAT model results feed into a spatial optimization procedure using two separate objective functions to distinguish between public BMP program implementation costs (PIC) on the one hand and farmers’ private pollution abatement costs (PAC) on the other hand. The latter account for the opportunity costs of land retirement and changing land productivity. PAC are initially lower than PIC but exceed the latter after 30% of the annual TP baseline load is eliminated. This suggests that under optimal conditions existing grant and incentive payments cover the economic costs farmers face up to a maximum of 30% of the baseline load reduction. Imposing further reductions of up to 40% results in a cost to farmers of almost $52 million per year. This is 45% higher than the optimal solution based on PIC and therefore not deemed incentive‐compatible under the watershed's existing cost‐sharing scheme.

Best Management Practices (BMPs) incentive programs have been introduced to protect agricultural land and reduce nutrient runoff in watersheds. However, their voluntary nature has not led to the expected high participation rates. We examine influencing factors and underlying drivers that are associated with BMP adoption and farmer preferences for specific BMPs. Data are collected through an online survey in Ontario, Canada in 2019. A binary logit model is estimated to explain current participation in BMP schemes and a multinomial logit model to predict preferences for future BMP uptake. Results show that a mix of farmer and farm characteristics and environmental attitudes explain both current participation in BMP schemes and the likelihood of adopting a future BMP. Farmers tend to endorse a BMP if they currently implement that BMP. The findings furthermore suggest that increasing farmers' environmental awareness and sharing positive BMP experiences with other farmers may help expand future BMP adoption in Ontario. • We examine underlying drivers of farmer BMP adoption and preferences in Canada. • We inspect both current participation and future choices using logit models. • Farmers fairly concerned about water pollution are more likely to adopt BMPs. • Farmers tend to endorse a BMP if they currently implement that BMP. • Demographic characteristics are not significant predictors of future adoption.

A discrete choice experiment was conducted on the non-use value of avoiding climate impacts to coral reefs. • The Northwestern Hawaiian Islands coral reefs were utilized as a case study site. • Decreasing coral cover and fish numbers causes large welfare losses. • Declines to coral health and fish species diversity lead to moderate welfare losses. • Choice behaviour is compared between US mainland and Hawaiian residents. Global climate change is leading to rapid deteriorations of the health and productivity of coral reefs. There is limited research on the associated human welfare implications, particularly in terms of the non-use values that people hold for coral reefs. We examine climate related changes in non-use values of coral health, coral cover, water clarity, fish numbers, fish species diversity and presence of turtles. Using a discrete choice experiment conducted among 1,369 Hawaiian and US mainland residents, we find that climate change induced declines in coral cover and fish numbers result in large welfare losses; whereas, declines in coral health and fish species diversity lead to moderate welfare losses. Deterioration in water clarity results in large welfare losses for US mainland residents but relatively smaller losses for Hawaiian residents. On aggregate, differences in welfare estimates for the US mainland and Hawaii sample are minor. However, we find significant differences in the underlying determinants of willingness-to-pay for partial climate change mitigation including income and beliefs in the need to mitigate climate change. The paper concludes with some recommendations for policy on the basis of these findings.

A traditional engineering-based approach to hydro-economic modelling is to connect a partial equilibrium economic assessment, e.g., changes in sectoral production, to a detailed water resources system model. Since the 1990s, another approach emerged where water data are incorporated into a macro-economic model, e.g., a computable general equilibrium or input-output model, to estimate both direct and indirect economic impacts. This study builds on these different approaches and compares the outcomes from three models in the transboundary Saskatchewan River Basin in Canada. The economic impacts of drought and socioeconomic development are estimated using an engineering-based model, a macro-economic model, and a model that integrates a water resources model and a macro-economic model. Findings indicate that although the integrated model is more challenging to develop, its results seem most relevant for water allocation, owing to capturing both regional and sectoral economic interdependencies and key features of the water resources system in more detail. • We compare three hydro-economic modelling approaches in a transboundary river basin. • Their applicability is examined under drought and economic development scenarios. • Usefulness of integrating water management and macroeconomic models is demonstrated. • Ignoring linkages between basins and sectors affects the model simulation results. • This may mislead water allocation decision-making in transboundary river basins.

The Great Lakes (GL) in North America are among the largest freshwater resources on the planet facing serious eutrophication problems as a result of excessive nutrient loadings due to population and economic growth. More than a third of Canada's GDP is generated in and around the GL. Hence, the economic interests affected by pollution and pollution control are high. New policies to reduce pollution are often insufficiently informed due to the lack of integrated models and methods that provide decision-makers insight into the direct and indirect economic impacts of their policies. This study fills this knowledge gap and estimates the impacts of different total phosphorus (TP) restriction policy scenarios across the GL. A first of its kind multi-regional hydro-economic model is built for the Canadian GL, extended to include TP emissions from point and non-point sources. This optimization model is furthermore extended with a pollution abatement cost function that allows sectors to also take technical measures to meet the imposed pollution reduction targets. The latter is a promising new avenue for extending existing hydro-economic input-output modeling frameworks. The results show decision-makers the least cost-way to achieve different TP emission reduction targets. The estimated cost to reduce TP emissions by 40% in all GL amounts to a total annual cost of 3 billion Canadian dollars or 0.15% of Canada's GDP. The cost structure changes substantially as policy targets become more stringent, increasing the share of indirect costs and affecting not only the economic activities around the GL, but the economy of Canada as a whole due to the tightly interwoven economic structure.

Increasing incidences of eutrophication and groundwater quality impairment from agricultural nitrogen pollution are threatening humans and ecosystem health. Minimal improvements in water quality have been achieved despite billions of dollars invested in conservation measures worldwide. Such apparent failures can be attributed in part to legacy nitrogen that has accumulated over decades of agricultural intensification and that can lead to time lags in water quality improvement. Here, we identify the key knowledge gaps related to landscape nitrogen legacies and propose approaches to manage and improve water quality, given the presence of these legacies.

There is increasing interest in the cost-effectiveness and economic benefits of replacing traditional engineering-based ‘grey’ infrastructure with nature-based ‘green’ infrastructure in the water sector. This study builds on the emerging literature in this field and sets itself apart in several ways. New in this study is the focus on the interrelationship between green infrastructure, water treatment costs proxied by drinking water rates, and drinking water safety. The latter refers to adverse treated water quality incidents (AWQI's) such as unsatisfactory bacteriological test results that may lead to drinking water advisories when sufficiently severe. An integrated modelling framework is furthermore developed, accounting simultaneously for possible spatial spill-over effects due to watershed land cover and potential endogeneity embedded in the relationship between water treatment costs, drinking water billing, and the occurrence of AWQI's. Data from the water- and forest-abundant and densely populated Canadian province of Ontario were used and significant negative correlations between forested land area and both drinking water rates and AWQI's are observed. While causality underlying these relationships needs further investigation, these results indicate support for the use of techno-ecological nature-based solutions in drinking water risk management.

Abstract As groundwater levels steadily decline in India, authorities are concerned about reducing extraction for irrigation purposes without jeopardizing food security. Very low or zero prices for electricity and water in agriculture is partly responsible for overextraction, but charging higher prices is politically not feasible. In this study, we describe the results of a pilot scheme implemented in Punjab, India, where farmers who enrolled were allocated a monthly entitlement of electricity units and compensated for unused electricity. Eight hours of uninterrupted daytime electricity supply were also provided under the scheme instead of the usual mix of daytime and night‐time supply. Analyzing data from a cross‐sectional farm household survey and instrumenting for enrollment, we find that self‐reported hours of irrigation for enrolled farmers were significantly lower than for non‐enrolled ones, with no impact on rice yields. We also find a reduction in monthly electricity consumption at electricity‐feeder level due to the pilot scheme using the synthetic control method. Our results suggest that the combination of daytime electricity provision and cash incentives for unused electricity has the potential to incentivize farmers to reduce electricity consumption and irrigation hours by at least 7.5% and up to 30% without impacting paddy yields.

The main objective of this study is to assess the economic value of the Brazilian Amazon’s ecosystem services accruing to Brazilians based on a meta-analysis of the Brazilian valuation literature. Insight in these local values provides an important benchmark to demonstrate the importance of preserving the Brazilian Amazon forest. The review covers almost 30 years of Brazilian valuation research on the Amazon, published predominantly in Portuguese, highlighting a high degree of study and data heterogeneity. The estimated mean value of the provision of habitat for species, carbon sequestration, water regulation, recreation and ecotourism to local populations is about 410 USD/ha/year. The standard deviation is however high, reflecting a wide dispersion in the distribution of values. Between 50 and 70 percent of the variation in these values can be explained with the help of the estimated meta-regression models, resulting in considerable prediction errors when applying a within-sample resampling procedure. These findings demonstrate the need for a more robust, common ecosystem services accounting and valuation framework before these values can be scaled up and aggregated across the entire Brazilian Amazon.

Agricultural phosphorus (P) losses to surface water bodies remain a global eutrophication concern, despite the application of conservation practices on farm fields. Although it is generally agreed upon that the use of multiple conservation practices (“stacking”) will lead to greater improvements to water quality, this may not be cost effective to farmers, reducing the likelihood of adoption. At present, wholesale recommendations of conservation practices are given; however, the application of specific conservation practices in certain environments (e.g., no-till with surface application, cover crops) may not be effective and can even lead to unintended consequences. In this paper, we present the Lake Erie watershed as a case study. The Lake Erie watershed contains regions with unique physical geographies that include differences in climate, soil, topography, and land use, which have implications for both P transport from agricultural fields and the efficacy of conservation practices in mitigating P losses. We define major regions within the Lake Erie watershed where common strategies for conservation practice implementation are appropriate, and we propose a five-step plan for bringing regionally tailored, adaptive, and cost-conscious conservation practice into watershed planning. Although this paper is specific to the Lake Erie watershed, our framework can be transferred across broader geographic regions to provide guidance for watershed planning.

Agricultural phosphorus (P) losses to surface water bodies remain a global eutrophication concern, despite the application of conservation practices on farm fields. Although it is generally agreed upon that the use of multiple conservation practices (“stacking”) will lead to greater improvements to water quality, this may not be cost effective to farmers, reducing the likelihood of adoption. At present, wholesale recommendations of conservation practices are given; however, the application of specific conservation practices in certain environments (e.g., no-till with surface application, cover crops) may not be effective and can even lead to unintended consequences. In this paper, we present the Lake Erie watershed as a case study. The Lake Erie watershed contains regions with unique physical geographies that include differences in climate, soil, topography, and land use, which have implications for both P transport from agricultural fields and the efficacy of conservation practices in mitigating P losses. We define major regions within the Lake Erie watershed where common strategies for conservation practice implementation are appropriate, and we propose a five-step plan for bringing regionally tailored, adaptive, and cost-conscious conservation practice into watershed planning. Although this paper is specific to the Lake Erie watershed, our framework can be transferred across broader geographic regions to provide guidance for watershed planning.

Rivers are under enormous threat worldwide and large amounts of money are invested in river restoration. Contrary to the costs, the benefits of river restoration are much harder to quantify. In this study, the benefits of restoring different sections of the Yongding River in Beijing, China, are estimated through a discrete choice experiment (DCE). Place attachment is measured by sampling residents upstream and downstream and using the river sections as labelled alternatives in the DCE. As expected, the improvement of water quality is valued highly by all river basin residents, and place attachment and spatial preference heterogeneity play a significant role in public willingness to pay (WTP) for river restoration. Although respondents are willing to give up only a small share of their disposable income, public WTP for improved river water quality is a factor 2 to 4 higher than the current household water bill. These findings provide important guidance for the recovery of the investment costs associated with river restoration projects. • The benefits of urban river restoration in Beijing are estimated • Residents living up and downstream of the Yongding River are interviewed • Public WTP for water quality improvements is several times higher than the current water bill • Spatial preferences and place attachment play a key role in public preferences • The study provides important info to guide investment decisions in river restoration

Rivers are under enormous threat worldwide and large amounts of money are invested in river restoration. Contrary to the costs, the benefits of river restoration are much harder to quantify. In this study, the benefits of restoring different sections of the Yongding River in Beijing, China, are estimated through a discrete choice experiment (DCE). Place attachment is measured by sampling residents upstream and downstream and using the river sections as labelled alternatives in the DCE. As expected, the improvement of water quality is valued highly by all river basin residents, and place attachment and spatial preference heterogeneity play a significant role in public willingness to pay (WTP) for river restoration. Although respondents are willing to give up only a small share of their disposable income, public WTP for improved river water quality is a factor 2 to 4 higher than the current household water bill. These findings provide important guidance for the recovery of the investment costs associated with river restoration projects. • The benefits of urban river restoration in Beijing are estimated • Residents living up and downstream of the Yongding River are interviewed • Public WTP for water quality improvements is several times higher than the current water bill • Spatial preferences and place attachment play a key role in public preferences • The study provides important info to guide investment decisions in river restoration

Three decades of non-market water quality valuation (NMWQV) studies in Canada are analyzed to generate a generic benefits transfer function. Contrary to the large valuation literature focusing on water and wilderness-based recreation in Canada, the number of studies related to water quality is limited. NMWQV studies lack a common design, including consistent adherence to a Canada-specific water quality ladder (WQL). Despite the high degree of data heterogeneity, values extracted from the literature show an increasing step function when relating them to the Resources for the Future WQL. Meta-regression models (MRMs) explain a large share of the variation in value estimates based on the type of water resources, population and methodological characteristics. Baseline water quality and the size of the water quality change are significant determinants of the estimated non-market values. With a relative mean prediction error of no more than 20 percent, the predictive power of the estimated MRMs is high. As such, they are an important step forward in the development of a policy-relevant water quality valuation model. However, there is a clear need for the development of more coherent non-market valuation guidelines in the Canadian water context.

Three decades of non-market water quality valuation (NMWQV) studies in Canada are analyzed to generate a generic benefits transfer function. Contrary to the large valuation literature focusing on water and wilderness-based recreation in Canada, the number of studies related to water quality is limited. NMWQV studies lack a common design, including consistent adherence to a Canada-specific water quality ladder (WQL). Despite the high degree of data heterogeneity, values extracted from the literature show an increasing step function when relating them to the Resources for the Future WQL. Meta-regression models (MRMs) explain a large share of the variation in value estimates based on the type of water resources, population and methodological characteristics. Baseline water quality and the size of the water quality change are significant determinants of the estimated non-market values. With a relative mean prediction error of no more than 20 percent, the predictive power of the estimated MRMs is high. As such, they are an important step forward in the development of a policy-relevant water quality valuation model. However, there is a clear need for the development of more coherent non-market valuation guidelines in the Canadian water context.

• Water security risks in a watershed are modelled using InVEST’s water yield model. • The impacts of future climate and land use changes on water stress are analyzed. • Water yield is negatively affected by climate change and positively by land use change. • Future water supply is less than the operating flow of a newly constructed dam. • Spatially differentiated conservation efforts are identified to ensure water security. Water security, a key policy objective for sustainable development, is under stress as a result of land use and climate change, especially in (semi-)arid areas like Iran. Land use change alters surface runoff and affects basin-wide hydrological processes and water consumption, while climate change modifies precipitation and temperature patterns and consequently evapotranspiration and water supply. In this study, water yield, supply and consumption are simulated in a watershed draining into the Caspian Sea in northern Iran, using the water yield model in the Integrated Valuation of Environmental Service and Tradeoffs (InVEST) tool. The novelty of this study is found in the combined modelling of the impacts of climate and land use change scenarios on water security, translating these results into a water stress indicator, and estimating the associated economic costs of reduced future water supply. The results show substantial spatial variation of the negative impacts of water supply and future water security across the watershed, further increasing the pressure on its inhabitants, their economic activities and ecological values. The estimation of the economic costs of increased water insecurity allows us to inform policy and decision-makers about future investments in climate adaptation and mitigation.

• Water security risks in a watershed are modelled using InVEST’s water yield model. • The impacts of future climate and land use changes on water stress are analyzed. • Water yield is negatively affected by climate change and positively by land use change. • Future water supply is less than the operating flow of a newly constructed dam. • Spatially differentiated conservation efforts are identified to ensure water security. Water security, a key policy objective for sustainable development, is under stress as a result of land use and climate change, especially in (semi-)arid areas like Iran. Land use change alters surface runoff and affects basin-wide hydrological processes and water consumption, while climate change modifies precipitation and temperature patterns and consequently evapotranspiration and water supply. In this study, water yield, supply and consumption are simulated in a watershed draining into the Caspian Sea in northern Iran, using the water yield model in the Integrated Valuation of Environmental Service and Tradeoffs (InVEST) tool. The novelty of this study is found in the combined modelling of the impacts of climate and land use change scenarios on water security, translating these results into a water stress indicator, and estimating the associated economic costs of reduced future water supply. The results show substantial spatial variation of the negative impacts of water supply and future water security across the watershed, further increasing the pressure on its inhabitants, their economic activities and ecological values. The estimation of the economic costs of increased water insecurity allows us to inform policy and decision-makers about future investments in climate adaptation and mitigation.

In this study, we develop a hydro-economic modelling framework for river-basin scales by integrating a water resources system model and an economic model. This framework allows for the representation of both local-scale features, such as reservoirs, diversions, and water licenses and priorities, and regional- and provincial-scale features, such as cross-sectoral and inter-regional connectedness and trade flows. This framework is able to: (a) represent nonlinearities and interactions that cannot be represented by either of typical water resources or economic models; (b) analyze the sensitivity of macro-scale economy to different local water management decisions (called 'decision levers' herein); and (c) identify water allocation strategies that are economically sound across sectors and regions. This integrated model is applied to the multi-jurisdictional Saskatchewan River Basin in Western Canada. Our findings reveal that an economically optimal water allocation strategy can mitigate the economic losses of water stress up to 80% compared to the existing water allocation strategy. We draw lessons from our analysis and discuss how integrated inter-regional hydro-economic modelling can benefit vulnerability assessment and robust decision making.

In this study, we develop a hydro-economic modelling framework for river-basin scales by integrating a water resources system model and an economic model. This framework allows for the representation of both local-scale features, such as reservoirs, diversions, and water licenses and priorities, and regional- and provincial-scale features, such as cross-sectoral and inter-regional connectedness and trade flows. This framework is able to: (a) represent nonlinearities and interactions that cannot be represented by either of typical water resources or economic models; (b) analyze the sensitivity of macro-scale economy to different local water management decisions (called 'decision levers' herein); and (c) identify water allocation strategies that are economically sound across sectors and regions. This integrated model is applied to the multi-jurisdictional Saskatchewan River Basin in Western Canada. Our findings reveal that an economically optimal water allocation strategy can mitigate the economic losses of water stress up to 80% compared to the existing water allocation strategy. We draw lessons from our analysis and discuss how integrated inter-regional hydro-economic modelling can benefit vulnerability assessment and robust decision making.

Global Institute for Water Security, School of Environment and Sustainability, Department of Civil, Geological, and Environmental Engineering, University of Saskatchewan, Saskatoon, Saskatchewan, Canada School of Geographical Sciences and Urban Planning, Arizona State University, Tempe, Arizona School of Civil, Environmental and Mining Engineering, University of Adelaide, Adelaide, Australia Water Institute and Department of Economics, University of Waterloo, Waterloo, Ontario, Canada Institute for Environmental Studies, Vrije Universiteit Amsterdam, Amsterdam, The Netherlands Department of Civil and Environmental Engineering, Imperial College London, London, UK

Hypothetical bias is tested based on inter- and intra-respondent comparisons of choice behavior, applying a hypothetical and real choice experiment. The inter-respondent comparison commonly applied in the environmental and agricultural economics literature consists of a control group of buyers who are asked to hypothetically choose between conventional and organic beans and an experimental group of buyers who are endowed to purchase the same beans using an identical experimental design. Hypothetical bias is tested by comparing inter- and intra-respondents’ (i) hypothetical and real choices, (ii) preference parameters of the estimated choice models related to hypothetical and real choices, and (iii) hypothetical and real willingness to pay (WTP). Choices in the experimental group are highly consistent when switching from hypothetical to real choices for this study's homegrown goods. However, after being endowed, the price sensitivity of lower income households drops, suggesting a house money effect. WTP derived from actual purchases is higher than WTP based on hypothetical choices, indicating a negative hypothetical bias, but differences are only significant in the case of the inter-respondent comparison. Actual prices paid by respondents in the field experiment appear to be considerably lower than the estimated WTP values and yield a mixed picture of hypothetical bias.

Finding sustainable pathways to efficiently allocate limited available water resources among increasingly competing water uses has become crucial due to climate-change-induced water shortages and increasing water demand. This has led to an urgent need for the inclusion of economic principles, models, and methods in water resources management. Although several studies have developed macro-economic models to evaluate the economic impacts of alternative water allocation strategies, many if not most ignore the hydrological boundaries of transboundary river basins. Furthermore, of those using input-output (IO) models, only a handful have applied supply-side IO models. In this paper, we present one of the first attempts to develop an inter-regional, supply-side IO modelling framework for a multi-jurisdictional, transboundary river basin to assess the direct and indirect economic impacts of water supply restrictions due to climate and policy change. Applying this framework to the Saskatchewan River Basin in Canada encompassing three provinces, we investigate the economic impacts of two different water supply restriction scenarios on the entire river basin and its sub-basins individually. We find that in the face of climate-change-induced water shortage, economic losses can be reduced by almost 50% by adopting appropriate management practices, including prioritization of water allocation, using alternative water sources, and water re-use technologies. • Sectoral water use is incorporated into a supply-side input-output model. • The model is spatially disaggregated into 6 sub-basins across 3 Canadian provinces. • The model evaluates the economic impacts of alternative water allocation policies. • The model results assist policymakers prepare efficient water management plans. • Adopting proper policies, potential economic drought losses can be reduced by 50%.

This paper presents a water-restricted multi-regional input–output model to evaluate the economic impacts of water supply reductions in the Canadian Great Lakes Basin (GLB), one of the largest fres...

Lebanon is facing an increasing water supply deficit due to the increasing demand for freshwater, decreasing surface and groundwater resources and malfunctioning water governance structures. Technological and policy changes are needed to alleviate the impact of water scarcity and secure water in the future. This paper investigates farmers' preferences and willingness to pay (WTP) in a choice experiment for a series of water saving measures at plot and irrigation district level, including more timely information of water delivery. These measures are expected to strengthen water security and use water more efficiently. Farmers are willing to pay higher water prices of $0.32/m3 and $0.22/m3 to support the implementation of water saving measures at plot level and the installation of water metering devices across the irrigation district, respectively. They are not willing to pay extra for obtaining information related to their water delivery earlier in time if this means that they will also have to pay earlier in the year for the water. Farmers with higher income and education levels who decide on their cropping pattern based on expected rainfall data are more interested in taking action than farmers whose cropping decisions are primarily based on last year's sales prices. The study shows that when aiming to design more effective sustainable water management strategies, accounting for farmers' needs and preferences, their age also has to be considered: younger farmers (<40 years) are on average more interested in and willing to pay more for new water saving measures than older farmers (>40 years).

Abstract The sustainable development goals (SDGs) and the Paris agreement target a global cleaner energy transition with wider adaptation, poverty reduction and climate resilience benefits. Hydropower development in the transboundary Koshi river basin in the Himalayan region presents an intervention that can support the SDGs whilst meeting the regional commitments to the Paris agreement. This study aims to quantify the benefits of proposed water resource development projects in the transboundary basin (4 storage and 7 run-of-the-river hydropower dams) in terms of hydroelectric power generation, crop production and flood damage reduction. A hydro-economic model is constructed by soft coupling hydrological and crop growth simulation models to an economic optimization model. The model assesses the potential of the interventions to break the vicious cycle of poverty and water, food, and energy insecurity. Unlike previous studies, the model (a) incorporates the possibility of using hydropower to pump groundwater for irrigation as well as flood regulation and (b) quantifies the resilience of the estimated benefits under future climate scenarios from downscaled general circulation models affecting both river flows and crop growth. The results show significant potential economic benefits generated from electricity production, increased agricultural production, and flood damage control at the transboundary basin scale. The estimated annual benefits are around USD 2.3 billion under the baseline scenario and USD 2.4 billion under a future (RCP 4.5) climate scenario, compared to an estimated annual investment cost of USD 0.7 billion. The robustness of the estimated benefits illustrates the climate resilience of the water resource development projects. Contrary to the commonly held view that the benefits of these proposed projects are limited to hydropower, the irrigation and flood regulation benefits account for 40 percent of the total benefits. The simulated scenarios also show substantial irrigation gains from the construction of the ROR schemes, provided the generated power is also used for groundwater irrigation. The integrated modelling framework and results provide useful policy insights for evidence-based decision-making in transboundary river basins around the globe facing the challenges posed by the water-food-energy nexus.

A novel integrated hydro-economic modeling framework that links a bottom-up partial equilibrium (engineering) model with a top-down (economic) general equilibrium model is developed for assessing the regional economic impacts of water resources management and infrastructure development decisions in a transboundary river basin. The engineering model is employed first to solve the water allocation problem for a river system in a partial equilibrium setting. The resulting system-wide changes in optimal water allocation are subsequently fed into the general equilibrium model to provide an economy-wide perspective. This integrated hydro-economic modeling framework is illustrated using the Eastern Nile River basin as a case study. The engineering-based stochastic dual dynamic programming (SDDP) model of the Eastern Nile basin is coupled with the computable general equilibrium (CGE) model GTAP-W to assess the economy-wide impacts of the Grand Ethiopian Renaissance Dam (GERD) on the Eastern Nile economies.

Abstract Switzerland plans to restore 4000 km of rivers by 2090. Despite the immense investment costs, river restoration benefits have not been valued in monetary terms, and a cost-benefit analysis (CBA) does not exist for any river restoration project in Switzerland. We apply stated preference methods to elicit public preferences and willingness to pay for restoring two specific but representative river sites. The benefits of restoration are compared with its costs. Upscaling the results to the national level shows that the government budget allocated for river restoration (CHF 1200/m) is insufficient to cover the costs of local restoration projects. However, the surveyed local populations are willing to pay substantially more for restoring rivers in their area of residence than they are legally obliged to do. The CBA results demonstrate that the benefits outweigh the costs in the two case studies, and hence that restoration efforts are justified from an economic point of view. A sensitivity analysis shows that the main results and conclusions do not change when we change some of the key assumptions underlying the CBA.

Abstract This paper provides a comprehensive review of two decades of published research that applies different economic approaches to address forested watershed management decisions. The review takes stock of the applied integrated economic and ecohydrological modeling approaches and assesses the way these approaches capture the complexities involved when linking ecohydrological and economic systems. The implications of integrating watershed services into forest management decisions are discussed, lessons are drawn from existing approaches and future research needs identified. Existing modeling approaches are categorized from independent modular models with a unidirectional flow of information to fully coupled holistic models, and are analyzed, among others, in terms of the efficiency improvement that forest-based investments achieve in watershed services provision. The review shows that the number of studies investigating the relationship between forest management and watershed services in economic decision-support models is very limited. Only 14 studies that were identified examine these relationships for water supply, while 9 studies were found to focus on the impact on water quality, 2 of which addressed water quality in combination with water supply. A shortcoming is that about half of the studies do not clearly specify baseline conditions to test the incremental value of the evaluated forest management actions in terms of watershed services provision, which undermines evaluating their cost-effectiveness or economic efficiency. A promising finding is nevertheless that in 8 of the 10 studies where these relationships were evaluated in terms of their costs and benefits compared to a specified baseline alternative, forest conservation or forest management is shown to be an economically efficient nature-based solution to supply the watershed services of interest. The limited availability of geo-referenced data and information, including the often complex and confidential nature of cost and price data, and the high data demands of more advanced spatial econometric models are among the main barriers to address relevant forest and water economic interactions. Important future extensions of existing integrated approaches include the further coupling of more detailed ecohydrological models and multi-sectoral hydro-economic models that are able to account for the different risks (floods, droughts, wildfires) and uncertainties under climate change and their impact on watershed services and water security.

Abstract A global meta-analysis consisting of almost three decades of groundwater quality valuation studies is presented. New in this study is the focus on the uncertainties surrounding different groundwater quality levels and the control included for groundwater contaminants originating from agriculture and other sources. Separate meta-regression models are estimated for the USA, Europe and the World, detecting sensitivity to scope and reference dependence. Public willingness to pay appears more sensitive to uncertainty in the baseline scenario than in the policy scenario. The high explanatory power of the estimated meta-regression models and low prediction errors provide confidence in their usefulness for reliable benefits transfer.

Abstract Improving groundwater quality is expected to yield direct use benefits to society (e.g. clean and safe drinking water) and groundwater dependent ecosystems. Ten years after the adoption of the European Groundwater Directive (GWD), policymaker and public understanding of the societal value of groundwater protection is still rather limited. This is partly due to the invisible and intangible nature of groundwater resources and the sheer lack of valuation studies. This study contributes to the limited number of groundwater valuation studies in Europe by estimating the public benefits from improved groundwater quality in the Aveiro Quaternary Aquifer (AQA) in Portugal. This is the first and only economic valuation study of groundwater in Portugal. In order to communicate the various benefits provided by groundwater resources in easy understandable terms to lay people, and to assess public perception and willingness to pay (WTP) for groundwater protection, a groundwater quality ladder was developed based on the threshold values proposed in the GWD. The ladder reflects the different use and non-use values of groundwater quality improvements and accounts for natural background levels of chemicals in groundwater. The large-scale survey targets a representative sample of residents in the AQA. Split samples are used to assess the impact of framing groundwater protection in a broader regional water resources management context, giving part of the sample furthermore time to think about their WTP for the different groundwater threshold levels. Although use values dominate public WTP for the different groundwater threshold values, substantial non-use values are also found. Public WTP is considerable, varying between 20 and 30% over and above the current water bill residents pay for safe drinking water quality and natural background levels, respectively. Giving respondents time to think and framing groundwater protection as part of the improvement of all water resources in the region results in a more conservative WTP estimate. Public WTP is higher for better informed private well owners in rural areas. Aggregated across the entire aquifer the estimated total economic value is 1.5 million euros annually for safe drinking water quality and 3.5 million euros annually for groundwater containing natural background levels only.

Payments for Environmental Services (PES) constitute an innovative economic intervention to counteract the global loss of biodiversity and ecosystem functions. In theory, some appealing features should enable PES to perform well in achieving conservation and welfare goals. In practice, outcomes depend on the interplay between context, design and implementation. Inspecting a new global dataset, we find that some PES design principles pre-identified in the social-science literature as desirable, such as spatial targeting and payment differentiation, are only partially being applied in practice. More importantly, the PES-defining principle of conditionality—monitoring compliance and sanctioning detected non-compliance—is seldom being implemented. Administrative ease, multiple non-environmental side objectives and social equity concerns may jointly help explain the reluctance to adopt more sophisticated, theoretically informed practices. However, by taking simplifying shortcuts in design and implementation, PES programmes may become less environmentally effective and efficient as economic incentives, thus underperforming their conservation potential.

This study was part of the European Framework 7 funded project ‘Restoring Rivers for Effective Catchment Management’ (REFORM).

A multi-country, multi-sector computable general equilibrium (CGE) model is employed to evaluate the economy-wide impacts of climate change under the IPCC’s A2 and B1 scenarios and existing irrigation development plans in the Nile basin. The study reveals that climate change adversely affects mainly downstream Egypt and to a lesser extent Sudan, while it results in a limited impact in the upstream countries Ethiopia and the Equatorial Lakes region, where irrigated agriculture is still limited. The economic consequences for Egypt are especially substantial if the river basin countries pursue a unilateral irrigation development strategy. In order to prevent water use conflicts and ease water scarcity conditions, a cooperative water development strategy is needed as well as economic diversification in favor of less water-intensive sectors, combined with investments in water-saving infrastructure and improved irrigation efficiency.

A multi-country, multi-sector computable general equilibrium (CGE) model is used for the first time to evaluate the economic and water resource availability effects of trade liberalization (removal of import tariffs) and facilitation (reducing non-tariff barriers) under climate change in the Nile Basin. The analysis uses the GTAP 9 Database and the GTAP-W model that distinguishes between rainfed and irrigated agriculture and implements water as a factor of production directly substitutable in the production process of irrigated agriculture. A full trade liberalization and improved trade facilitation scenario is considered with and without climate change. The study reveals that trade liberalization and facilitation generates substantial economic benefits and enhances economic growth and welfare in the Nile basin. The effect of instituting a free trade policy on water savings is found to be limited, while climate change improves water supply and hence irrigation water use, enhancing economic growth and welfare in the basin.