Modeling Water Scarcity and Drought Severity for Policy Adaptation to Climate Change: Application to the Jucar Basin, Spain
Growing water extractions from agriculture and urban uses combined with emerging demands for environment protection are increasing competition for scarce water resources worldwide, especially in arid and semiarid regions. In those regions, climate change is projected to exacerbate water scarcity and increase the recurrence and intensity of drought events. These circumstances call for methodologies that can support the design of sustainable water management policies. This paper presents an integrated hydro-economic model that links a reduced form hydrological component, with economic and environmental components. The model is applied to the Jucar Basin of Spain to analyze the effects of droughts and to assess alternative drought management policies. Results indicate that drought events have large impacts on social welfare in the basin, with the main adjustments sustained by irrigation activities and the environment. Results demonstrate that implementing water markets among private decision-makers is a suitable option to overcome the negative economic effects of droughts. However, the environmental effects of water trading may weaken its advantages for society. The current water management approach in the Jucar Basin is based on negotiated arrangements and stakeholders’ cooperation. This is an interesting policy because of its potential to balance economic and environmental objectives. Furthermore, using water markets to allocate water into the environment is another appealing policy in the absence of minimum binding inflows to ecosystems. These issues illustrate the potential of hydro-economic modeling for integrating the multiple dimensions of water resources, becoming a valuable tool in the advancement of sustainable water management policies.