Economic modelling

Catchment-wide economic valuation of green- and blue-water resources will allow assessing the feasibility of proposed management options, and payment-for-ecosystem services schemes (PES) will be simulated to assess their suitability to promote such changesĀ (ch4-5).

The ODDYCCEIA water management modeling framework allow to project water demands and their values, determine operating rules for reservoirs management taking into account biophysical and economic constraints, by matching supply and demand and maximizing economic benefits. Irrigation water is valued using differential irrigated/rainfed land rents, computed as net benefits when rents are not directly known.

The framework is generic and can be applied with data available at large scale. In the INNOMED project, however, it is expected that more precise data for whole basins that are to be studied will be available, in particular for the network topology and for the demands. The operating rules of ODDYCCEIA include hedging to account for prudential rules and allow determining the coordinated operation of the reservoirs and satisfaction of the demands that maximizes the economic benefits.

Plans for INNOMED:

  • Determine the value of additional water inflow and decreased demand using ODDYCEIA modelling on the whole basin;
  • Use case study information on land-use change and irrigation practices to determine both water quantities change and economic costs of modified practices;
  • Determine the overall benefits of the options.