ECONOMICS AND THE MODELING OF WATER RESOURCES AND POLICIES
Version of Record online: 30 DEC 2011
Copyright ©2011 Wiley Periodicals, Inc.
Natural Resource Modeling
Special Issue: 25 Years of Natural Resource Modeling: Perspectives of Then and Now
Volume 25, Issue 1, pages 168–218, February 2012
How to Cite
BOOKER, J. F., HOWITT, R. E., MICHELSEN, A. M. and YOUNG, R. A. (2012), ECONOMICS AND THE MODELING OF WATER RESOURCES AND POLICIES. Natural Resource Modeling, 25: 168–218. doi: 10.1111/j.1939-7445.2011.00105.x
- Issue online: 30 DEC 2011
- Version of Record online: 30 DEC 2011
- Accepted 29th July 2011.
- Economic modeling;
- policy analysis;
- water resources;
- hydroeconomic models;
- integrated models;
- water value;
- water demand;
- water supply;
Abstract Over the last 25 years, economic water policy models have evolved in concept, theoretical and technical methods, scope and application to address a host of water demand, supply, and management policy questions. There have been a number of theoretical and empirical advances over this period, particularly related to estimation of nonmarket, public good water-related values involving different methods of valuation. We discuss modeling advances including modeling multiple, competing demands, types of incentives and technologies and behavioral responses, incorporation of groundwater and other supply alternatives, integration of institutional factors, and increasing attention to system-wide impacts. The largest changes in hydroeconomic policy models have been the integration of the individual demand and supply components, inclusion of environmental values, incorporation of governance and institutional conditions (laws, regulations and policies), and expansion to river basin and even interposing scales of analysis. Important areas of future hydroeconomic model advances will be the use of genetic and neurological based algorithms for solving dynamic, stochastic problems, reconstruction of hydrological and economic relationships for remotely sensed data, and the expansion of models to understand and address transboundary water resource economic, hydrologic, environmental and institutional policy, and interdependencies.