A Multiregional Input-Output Hydro-Economic Modeling Framework: An Application to the Ebro River Basin

Sustainable water management is challenging because of the wide range of agents who need water and the different kinds of use, in a context of limited water availability. The availability of water for use, at a given point in time and space, depends on numerous physical and climatic variables, as well as upstream uses and downstream commitments. Therefore, any analysis of water use and management must inevitably be made in the context of such variability. This paper develops an integrated, multiregional, hydro-economic modeling framework to analyze the spatial and temporal dependencies between economic agents in the different regions and areas of a river basin. We combine hydro-economic modeling (partial economic equilibrium) and a multiregional input-output model (general equilibrium) to take advantage of both methodologies. Spatial variability is considered in the input-output models, but variability in both time and space is also considered by the hydro-economic model. Hydro-economic models are used to quantify direct impacts, but not indirect impacts in some specific sectors of the economy, while the input-output model reveals the relationships between all sectors and regions, and facilitates the assessment of total impacts (direct plus indirect) of a range of scenarios. While the methodology described in this paper is applicable to any river basin, the case study considered is the Ebro River Basin, in Spain. To show the potential of the modeling framework, two scenarios are simulated to assess the impacts on water use, value added, and jobs across scales. The results of these scenarios show that decreases in water availability have negative impacts on socio-economic variables (value added and employment). The trade-off between water availability and socio-economic variables depends on the temporal and spatial variability of the resource, and affects each location in the basin in a different way, demonstrating the importance of the methodology developed.