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Water demand management, Domestic water use, Gini coefficient, Equity, Yellow River,

Economic analysis of climate scenarios and alternative water policies is critical for development and implementation of appropriate water policies and programs. Mathematical models have been developed to assess water resources policies due to their ability to explicitly represent the biophysical dynamics of natural systems while integrating these within social and economic constraints. These models have been criticised, however, due to the problems of simplification, overspecialisation, plausibility and lack of empirical validation. This paper introduces a mathematical programming model which uses positive mathematical programming method to calibrate and model agriculture and water use in the Murray-Darling Basin of Australia. This paper reviews the theoretical and technical details of the model development including the key steps taken in collating and scaling the biophysical and economic data, and to address model parameterisation issues. The paper summarises results of an application of the model for assessing climate change impacts in the form of reduced rainfall and water allocations and increased crop water use for agricultural production. The results show the degree of variability in gross values under different climate scenarios compared to the base case scenario, especially in very dry years. The results also show how on-farm adaptation options and water markets can mitigate these losses.

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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 A. Elmahdi ( ) CSIRO, land and water, Springer 4 Environmentalist (2007) 27:3-12 possible trading volumes and differential water resource prices. Two hypothetical systems have been presented here as an example. The results show that the System Dynamics approach has a significant advantages in estimating and assessing the outcomes of alternative water management strategies through time and space.