Future water management will shift from building new water supply systems to better operating existing ones. Given these goals, hydro-economic models that show the dynamic variation of water values in time and space will be increasingly used to suggest ways to address water scarcity and reduce water conflicts. Hydro-economic models represent spatially distributed water resource systems, infrastructure, management options and economic values in an integrated manner. In these tools water allocations and management are either driven by the economic value of water or evaluated by that measure to provide policy insights and reveal opportunities for better management. A central concept is that water demands are not fixed requirements but rather functions where quantities of water use at different times have varying total and marginal economic values. This paper reviews techniques to characterize the economic value of water use and include such values in mathematical models. We identify the key steps in model design and diverse problems, formulations, levels of integration, spatial and temporal scales, and solution techniques addressed and used by over 60 hydro-economic modeling efforts dating back 45-years from all over the world. We list current limitations of the approach, suggest directions for future work, and recommend ways to improve policy relevance so promising management strategies and policy insights identified by hydro-economic models can be better employed.

California's 5-year drought has ended, even as its aftermath lingers. From 2012-2016 much or all of California was under severe drought conditions, with greatly diminished precipitation, snowpack, and streamflow and higher temperatures. Water shortages to forests, aquatic ecosystems, hydroelectric power plants, rural drinking water supplies, agriculture, and cities caused billions of dollars in economic losses, killed millions of forest trees, brought several fish species closer to extinction, and caused inconvenience and some expense to millions of households and businesses. The drought also brought innovations and improvements in water management, some of which will better prepare California for future droughts. This paper summarizes the magnitude and impacts of the 2012-2016 California drought. The paper then reviews innovations arising from the drought in the larger historical context of water management in California. Lessons for California and for modern drought management are then discussed. Droughts in modern, well-managed water systems serving globalized economies need not be economically catastrophic, but will always have impacts and challenges, particularly for native ecosystems. In California and every other water system, droughts usefully expose weaknesses and inadequate preparation in water management. In this regard for California, managers of ecosystems and small rural water supplies had the most to learn.

Journal article"The ability of California's water supply system to adapt to long-term climatic and demographic changes is examined. Two climate warming and a historical climate scenario are examined with population and land use estimates for the year 2100 using a statewide economic-engineering optimization model of water supply management. Methodologically, the results of this analysis indicate that for long-term climate change studies of complex systems, there is considerable value in including other major changes expected during a long-term time-frame (such as population changes), allowing the system to adapt to changes in conditions (a common feature of human societies), and representing the system in sufficient hydrologic and operational detail and breadth to allow significant adaptation. While the policy results of this study are preliminary, they point to a considerable engineering and economic ability of complex, diverse, and inter-tied systems to adapt to significant changes in climate and population. More specifically, California's water supply system appears physically capable of adapting to significant changes in climate and population, albeit at a significant cost. Such adaptation would entail large changes in the operation of California's large groundwater storage capacity, significant transfers of water among water users, and some adoption of new technologies." -- Authors' AbstractIFPRI3; ISI; GRP38; Theme 3; Subtheme 3.1; Theme 1; Environment and Natural Resource Management; Managing natural resources; Global food scenariosEPTDP

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Abstract:The ability to accurately monitor and anticipate changes in consumptive water use associated with changing land use and land management is critical to developing sustainable water management strategies in water-limited climatic regions. In this paper, we present an application of a remote sensing data fusion technique for developing high spatiotemporal resolution maps of evapotranspiration (ET) at scales that can be associated with changes in land use. The fusion approach combines ET map timeseries developed using an multi-scale energy balance algorithm applied to thermal data from Earth observation platforms with high spatial but low temporal resolution (e.g., Landsat) and with moderate resolution but frequent temporal coverage (e.g., MODIS (Moderate Resolution Imaging Spectroradiometer)). The approach is applied over the Sacramento-San Joaquin Delta region in California-an area critical to both agricultural production and drinking water supply within the state that has recently experienced stresses on water resources due to a multi-year (2012-2017) extreme drought. ET "datacubes" with 30-m resolution and daily timesteps were constructed for the 2015-2016 water years and related to detailed maps of land use developed at the same spatial scale. The ET retrievals are evaluated at flux sites over multiple land covers to establish a metric of accuracy in the annual water use estimates, yielding root-mean-square errors of 1.0, 0.8, and 0.3 mm day −1 at daily, monthly, and yearly timesteps, respectively, for all sites combined. Annual ET averaged over the Delta changed only 3 mm year −1 between water years, from 822 to 819 mm year −1 , translating to an area-integrated total change in consumptive water use of seven thousand acre-feet (TAF). Changes were largest in areas with recorded land-use change between water years-most significantly, fallowing of crop land presumably in response to reductions in water availability and allocations due to the drought. Moreover, the time evolution in water use associated with wetland restoration-an effort aimed at reducing subsidence and carbon emissions within the inner Delta-is assessed using a sample wetland chronosequence. Region-specific matrices of consumptive water use associated with land use changes may be an effective tool for policymakers and farmers to understand how land use conversion could impact consumptive use and demand.

[1] If abrupt climate change has occurred in the past and may be more likely under human forcing, it is relevant to look at the adaptability of current infrastructure systems to severe conditions of the recent past. Geologic evidence suggests two extreme droughts in California during the last few thousand years, each 120-200 years long, with mean annual streamflows 40%-60% of the historical mean. This study synthesized a 72 year drought with half of mean historical inflows using random sampling of historical dry years. One synthetic hydrological record is used, and sensitivity to different interpretations of the paleorecord is not evaluated. Economic effects and potential adaptation of California's water supply system in 2020 to this drought is explored using a hydroeconomic optimization model. The model considers how California could respond to such an extreme drought using water trading and provides best-case estimates of economic costs and effects on water operations and demands. Results illustrate the ability of extensive, intertied, and flexible water systems with heterogeneous water demands to respond to severe stress. The study follows a different approach to climate change impact studies, focusing on past climate changes from the paleorecord rather than downscaled general circulation model results to provide plausible hydrologic scenarios. Adaptations suggested for the sustained drought are similar for dry forms of climate warming in California and are expensive but not catastrophic for the overall economy but would impose severe burdens on the agricultural sector and environmental water uses.

Limited water availability, population growth, and climate change have resulted in freshwater crises in many countries. Jordan’s situation is emblematic, compounded by conflict-induced population shocks. Integrating knowledge across hydrology, climatology, agriculture, political science, geography, and economics, we present the Jordan Water Model, a nationwide coupled human–natural-engineered systems model that is used to evaluate Jordan’s freshwater security under climate and socioeconomic changes. The complex systems model simulates the trajectory of Jordan’s water system, representing dynamic interactions between a hierarchy of actors and the natural and engineered water environment. A multiagent modeling approach enables the quantification of impacts at the level of thousands of representative agents across sectors, allowing for the evaluation of both systemwide and distributional outcomes translated into a suite of water-security metrics (vulnerability, equity, shortage duration, and economic well-being). Model results indicate severe, potentially destabilizing, declines in freshwater security. Per capita water availability decreases by approximately 50% by the end of the century. Without intervening measures, >90% of the low-income household population experiences critical insecurity by the end of the century, receiving <40 L per capita per day. Widening disparity in freshwater use, lengthening shortage durations, and declining economic welfare are prevalent across narratives. To gain a foothold on its freshwater future, Jordan must enact a sweeping portfolio of ambitious interventions that include large-scale desalinization and comprehensive water sector reform, with model results revealing exponential improvements in water security through the coordination of supply- and demand-side measures.

California agriculture is driven by the interactions between technology, resources, and market demands. Future production is a balance between the rates of change in these variables and environmental factors including climate change. With tight statewide water supplies and agriculture being an important part of the California economy, quantifying the economic consequences of changes in these variables is important for addressing related policy questions. We estimate the economic effects of climate change on California crop farming by year 2050 using the Statewide Agricultural Production Model (SWAP). With climate warming, crop yields are expected to decline, production costs to increase, and water supplies to fall. These negative effects may be partially offset by higher crop prices and technological improvements. Results indicate that gross agricultural revenues across all regions are reduced under climate change, as is water usage. However, given the climate-induced reductions in water supply and crop yields, reductions in revenue are proportionally less due to shifting crop demands, technological change, and a shift to higher value less water intensive crops. Given the long time horizon required in this study, the results should not be considered a projection or forecast, but as a probable outcome of the interaction of several uncertain driving forces.