Integrated Hydrologic - Economic Modeling of River Basins ode g o e as s

Claudia RinglerClaudia RinglerIFPRI

UCD/Embrapa

An Example of a Typical River Basin…

PrecipitationFishing

River Basin BoundaryIndustry U b

Hydropowerg

Forest

Rura

Runoff

Reservoir

dust y Urban WSS

Recreation

Rainfed AgrRural WSS

IrrigationReturn Flow

Navigation

Recreation

Infiltration / Recharge

Groundwater InflowCommunity Use

LivestockGroundwater

Infiltration / Recharge

Base Flow / PumpingWetlands / Environ

UCD/EmbrapaOcean

Irrigation…there is a need to understand how one use/r affects other uses and users… Groundwater Outflow

Figure based on Rao 2005

Growing Intersectoral Competition

CHANGET h l iGROWTH

Agr

- Technologies- Environment

GROWTH- Economy- Population- Urbanization

QuantityQuality

Ind Dom

EnvENVIRONMENT

social ENVIRONMENT- social- legal- political- institutional

ENVIRONMENT- physical- technical- economic

UCD/Embrapa

- institutional

Economics versus Engineering in Basin Models

• Hydrologic simulation models are important for real-time operation of dams & river systems

Models

real-time operation of dams & river systems

• Economic optimization models are important for investment calculationsinvestment calculations

• Optimization in simulation models is generally f li i d f ll i b dof limited use for water allocation based on

economic efficiency purposes

• Economic models without sufficient hydrologic representation is also of limited use

UCD/Embrapa

• Joint hydrologic-economic models can be used for strategic decision-making in river

Engineering-Economic Issues

UCD/Embrapa

Engineering-Economic Issues

UCD/Embrapa

W t

Physical

W t

SocialEnvironmentGeography

Geology Politics Economics S i lWater

DemandWater Resources

gyClimatology Meteorology Ecology

Sociology Law Institutions …..

Water Resources Management

Hydrology…….

g

Control (Hard) Technology Adaptive (Soft) Technology

Water Supply

Flood Control

Hydro Power

... Fees Taxes

Water Rights

Subsi-dies

...

UCD/Embrapa

SolutionsFeedbacks

Model Structure

Institutional Norms / Economic Incentives

Maximization of net benefitsRiver BasinH d l i t ti

Crop production/ Irrigation profits

Hydrologic system operation

Instream uses•Power generation

Off-streamuses

Domestic Benefits

Hydrop. Profits

•Salinity control

D&I Irrigation

Ground-water

IndustrialProfits

On-Farm water distribution

g

UCD/EmbrapaHydrology / Supply Side Economics / Demand Side

Compartment Modeling vs. Holistic Modeling

i H d l i b d lHydrologic sub-model Hydrologic sub-model

Inter-relationships

E i b d l

Data exchangesEconomic sub-model

p

Economic sub-model

• Production function with water as an input• Environmental value (benefit) function • Investment/cost function: investment/cost

UCD/Embrapa

Investment/cost function: investment/cost infrastructure water yields

outflow Downstream economic

Precipitation Other sourcesRunoff

inflow

River reaches & reservoirsinstream uses : hydropower, recreation, anddilution

diversion offstream uses

return flowaquifer-riverinter-flow

evapotranspiration

and environmentalrequirements

Consumptiveuse

Distributionsystem

surface drainage

evapotranspiration& other comsumptiveuse

i it ti

Industrial & municipal

demand sites

Agriculturaldemand sites

water

drainagedisposal/treatment

reuseprecipitation

Treatment

surface waterindustry

demand sites

seepageGroundwater

pumping

groundwatergroundwater

spillage loss

percolationtail water

pumpingDrainage collectionsystem

return flowseepage

precipitation

drainage

deep percolationriver

UCD/EmbrapaGroundwater system

riverdepletion

DN0aCa1

BE1 A1DN1Node

MNSNTMPRNT IPRNTDN0a

Ca1

BE1 A1DN1Node

MNSNTMPRNT IPRNT

RIVER BASIN NETWORKRIVER BASIN NETWORK HYDROLOGY

DN0b

DN0c

Ca2 Ca3 Ca4

Ls2 Ls3 Ls4Ls1

BE1

BE2

SG1A2DN2

A14bBE2A27Ca1

MLHLD

MPLBP

revTM

NodeA22VD1 Irrigation demand site

Domestic demand siteIndustrial demand siteReservoir

MCTTN

ITHTN

revDNA14aBE2

DN0b

DN0c

Ca2 Ca3 Ca4

Ls2 Ls3 Ls4Ls1

BE1

BE2

SG1A2DN2

A14bBE2A27Ca1

MLHLD

MPLBP

revTM

NodeA22VD1 Irrigation demand site

Domestic demand siteIndustrial demand siteReservoir

MCTTN

ITHTN

revDNA14aBE2

DN1

DN2

DN3

LN1

LN2

Lu2 Lu3 Lu4Lu1

Qu2 Qu3Qu1

BE3

BE4

SG2VD1

VD3

VT1

VD2A3DN3

A4DN4

A5DN5A10LN1

A16BE4

A15BE3A15BE3A22VD1

A23aVD2

A18bSG2 A18aSG1

A19bSG4

A28Ls1

A29Lu1

MLNBP

MBBBT

MTPBT

revDT

SQMTTTN

ITHTN THC

WC

ITTTN

MTHLAMDLLD

DN1

DN2

DN3

LN1

LN2

Lu2 Lu3 Lu4Lu1

Qu2 Qu3Qu1

BE3

BE4

SG2VD1

VD3

VT1

VD2A3DN3

A4DN4

A5DN5A10LN1

A16BE4

A15BE3A15BE3A22VD1

A23aVD2

A18bSG2 A18aSG1

A19bSG4

A28Ls1

A29Lu1

MLNBP

MBBBT

MTPBT

revDT

SQMTTTN

ITHTN THC

WC

ITTTN

MTHLAMDLLD

DN4DN5

DN6

DN7

LN3

LN4

LN5

LN6

DN8

BE5

BE6

SG3

SG4

VD3

VD4VT2

Ct2 Ct3Ct1A8aDN8

A6DN6

A7DN7

A9DN9a A11LN2

A13bBE1

A17BE5

A19cSG5

A20aSG7

A23bVD3

A25VT1

A20cSG9A30Qu1

A31Ct1

revSQ

MPTBTA13cBE1A13aBE1

A8bDN8 A8cDN8

A19dSG6A19aSG3 revHT

revDmi

ECITTTN

MTTLA A9DN9b

IPTBT

DN4DN5

DN6

DN7

LN3

LN4

LN5

LN6

DN8

BE5

BE6

SG3

SG4

VD3

VD4VT2

Ct2 Ct3Ct1A8aDN8

A6DN6

A7DN7

A9DN9a A11LN2

A13bBE1

A17BE5

A19cSG5

A20aSG7

A23bVD3

A25VT1

A20cSG9A30Qu1

A31Ct1

revSQ

MPTBTA13cBE1A13aBE1

A8bDN8 A8cDN8

A19dSG6A19aSG3 revHT

revDmi

ECITTTN

MTTLA A9DN9b

IPTBT

LN7DN8

DN10

SG4

SG5

VD5

Ph2 Ph3Ph1

Di2 Di3Di1

A12aLN3

A13aLN4

A24VD4

A32Ph1

MTDBD

DN9A21aDN10 A12bLN3

A21bDN10

A21cDN10

A20bSG8A20dSG10

A13bLN4

MXLDN

ITDBD

revTArevTA

MTTLA

ITHLA

A9DN9b

IDABD

MDABD

LN7DN8

DN10

SG4

SG5

VD5

Ph2 Ph3Ph1

Di2 Di3Di1

A12aLN3

A13aLN4

A24VD4

A32Ph1

MTDBD

DN9A21aDN10 A12bLN3

A21bDN10

A21cDN10

A20bSG8A20dSG10

A13bLN4

MXLDN

ITDBD

revTArevTA

MTTLA

ITHLA

A9DN9b

IDABD

MDABD

DN11

DN12

DN13

DN14

SG6

VD6VT3

VD7Ray2 Ray3Ray1

A26aVD5A26bVT2

A33Di1

A34Ray2A36bDN12

MBHDN

MTDBDMTDHC

MHTBT

IBHDN

ITDHC

A36aDN11

MCDBVA34Ray1

DN11

DN12

DN13

DN14

SG6

VD6VT3

VD7Ray2 Ray3Ray1

A26aVD5A26bVT2

A33Di1

A34Ray2A36bDN12

MBHDN

MTDBDMTDHC

MHTBT

IBHDN

ITDHC

A36aDN11

MCDBVA34Ray1

UCD/EmbrapaDN16

DN15 Xoai2 Xoai3Xoai1

A35Xoai1

A36bDN12

MBRBVIBRBV

A36dDN14

A36cDN13

MCDBV

DN16

DN15 Xoai2 Xoai3Xoai1

A35Xoai1

A36bDN12

MBRBVIBRBV

A36dDN14

A36cDN13

MCDBV

Economics – Benefit Functions Relating Water to Off-stream or Instream use

p(w) p (w ) (w/w )α (i d d f ti )M&I Water Uses -

p(w) = p0(w0) (w/w0)α (inverse demand function)

( ) wpwwwwpwVMw

= ∫ /)()( α

VM benefit from M&I water use (US$),

( ) wpwwwwpwVMw

⋅−⋅= ∫0

000 /)()(

w0 normal water withdrawal (m3)p0 willingness at w0 (US$)e price elasticity, α=1/e 400

500

n U

S$)

e price elasticity, α 1/ewp water price

100

200

300

Ben

efit

(mill

ion

UCD/Embrapa

00 200 400 600 800 1000 1200 1400 1600

Water withdrawal (million m3)

B

Economics – Benefit Functions Relating Water to Off-stream or Instream use

wawaayy

y a ln321 +⋅+== Yield as function of water, salinity, and i i ti t h l i

Crop Yield Function

ym

cbubba 3211 ++=

cbubba 6542 ++=

irrigation technology, a regression based on model experiments.

6542

cbubba 9873 ++=

w water application relative to crop ETCUC=0.7 CUC=0.8 CUC=0.9

s 0 3 s 0 7 s 1 2pp p

c salt concentration in water application (dS/m)u Christiensen Uniformity Coefficient (CUC).

0 6

0.8

1m

ax. c

rop

yiel

d

0 6

0.8

1

max

. cro

p yi

eld

s=0.3 s=0.7 s=1.2

0.2

0.4

0.6

Yiel

d re

lativ

e to

m

0.2

0.4

0.6

Yiel

d re

lativ

e to

UCD/Embrapa

00 1 2 3 4

Water relative max. crop ET

00 1 2 3 4

Water relative to max. crop ET

Economics – Benefit Functions Relating Water to Off-stream or Instream use

⎥⎤

⎢⎡

⎥⎤

⎢⎡

⎥⎥⎤

⎢⎢⎡

m xx 1131211 γγγγ

Alternative Crop Yield Function

[ ]

⎥⎥⎥⎥⎥

⎦⎢⎢⎢⎢⎢

⎣⎥⎥⎥⎥

⎦⎢⎢⎢⎢

⎣

+

⎥⎥⎥⎥⎥⎥

⎦⎢⎢⎢⎢⎢⎢

⎣

=

inmnnn

m

mnn

xxxx

xxxx

x

xxx

xixxY3

2

1

321

3333231

2232221321

3

2

1

32121 ],,,,[),..,(

γγγγγγγγγγγγ

αααα

A quadratic yield function of water, investment, fertilizer, pesticides, machinery, labor, and seeds

⎦⎣⎥⎦⎢⎣ ix

15.0

)

IRINV=20$/ha IRINV=60$/ha IRINV=100$/ha

5.0

10.0

eld

(mt/h

a)

UCD/Embrapa0.0

5.0

0 0.5 1 1.5 2 2.5

Yie

Economics – Benefit Functions Relating Water to Off-stream or Instream use

Benefits from wetland uses

pdwdpdwdpdpd

wdpdwdwd

dll

dfwfdwywaVW

2

,2

,,

)(

)( ⋅−⋅⋅=

∑

∑∑ β

pdwdpdwdpd

dlwlw ,2

, )( ⋅− ∑Wherewa = area of wetland (ha)wa = area of wetland (ha)wy = wetland yield, estimated (US$/ha)fd = deviation of flows from ‘normal’ flows,lw = deviation of lake storage from ‘normal’ storage (only forlw deviation of lake storage from normal storage (only for

Cambodia)dfw= damage coefficient for flows at wetland sitesdlw = damage coefficient for lake storage at wetland site (only

UCD/Embrapa

g g ( yfor Cambodia)

β = the adjustment factor (here: 1.1).

Wetland Net Benefit Function, Example Lao PDREconomics – Benefit Functions Relating Water to Off-stream or Instream use

UCD/Embrapa

National or National or regional policies on water

Institutions: Organizations and Policies

National or Regional agencies

National or regional policies on waterand economic development

Basin policies on multiplepurposes of water use water supply

Basin (sub-basin) authoritypurposes of water use, water supply, hydropower, environmentaland ecological requirements, water quality, flooding control,

it i d O&MAdministrative units(states or provinces,

ti iti )

capacity expansion and O&M

Inter-regional agreements on water allocation and water tradecounties or cities) water allocation and water trade

Inter-sector water allocation, water right and marketsIrrigation

districtsUrban areas water right and markets,

water prices and O&M cost,water use agreements,

UCD/Embrapa

Farms On-farm water management

T O ti i ti Si l ti

Model Description – Holistic ApproachType: Optimization + Simulation

Structure: Holistic, spatially distributed sources & demand

&Process: Deterministic & extended stochastic

Spatial Domain: Basin + Groundwater

Time Domain/Step: Multi-year planning horizon / month

Governing Eq’ns: Algebraic hydro/agro/econ/inst.

Objective Function: Maximize net water benefits: Irri./M&I/hydroState variables: River flows / reservoir storage / groundwater

table / soil moisture / soil salinitytable / soil moisture / soil salinity

Decision Variables: Crop acreage / water withdrawal & alloc./ reservoir release / groundwater pumping /

UCD/Embrapa

reservoir release / groundwater pumping / capacity expansion / economic incentives

Limitations

Cannot be used for day-to-day river system operationoperation

Can be linked to poverty if water users are disaggregated by income levels f exdisaggregated by income levels, f.ex.

Focus on productive water uses manipulated by h d l i f dhumans, and less on rainfed water management [where a lot of poverty persists], but the latter can be represented if it rainfed agriculturecan be represented if it rainfed agriculture results in changes in inflows

UCD/Embrapa

Modeling Water-Poverty Links:A Brief Overview of SFRB Methods

Steve Vosti&

SFRB Team

UCD/EmbrapaFebruary 2008

Estimating Impacts, Behavioral Changes, or BothChanges, or Both

• Ignore One or Both• Guess at One of Both• Guess at One of Both• Generate Empirical Estimates

– Very simply – e.g., general notions based on PRA exercisesy p y g , g– More complex – e.g., farm budgets, NR inventories, land use

systems analysisVery complex e g bioeconomic models that simulate– Very complex – e.g., bioeconomic models that simulate human behavior and biophysical processes

• Which Is the Proper Tool for You?p– What is the policy question (type of policy, target, time

frame)?How much time do you have?

UCD/Embrapa

– How much time do you have?– How much money do you have?

Key Objectives of Hydro-Economic Models

• Understand Farmer Behavior and Outcomes– Cropping patterns, input mix, water use– Income– Surface water and groundwater availability

• Predict the Effects of Proposed Policy and other Changes on Farmer Behavior/OutcomesChanges on Farmer Behavior/Outcomes

• Inform Policy• Modeling at Three Spatial ExtentsModeling at Three Spatial Extents

– Plot-Level LUS Model– Buriti Vermelho Model

UCD/Embrapa

– Basin-Wide Model

One Tool -- LUS Analysisy• Focus on Land Use Systems (LUS)

– Multi-year duration – Different intermediate and end uses

• Estimate Economic Performance– Discounted streams of input costs and product revenuesDiscounted streams of input costs and product revenues

• Technical coefficients and input/output prices– Calculate economic returns to key factors of production

• Land, labor,

• Estimate the Environmental Effects– E.g., carbon stocks

• Estimate the Sociocultural Effects• Estimate the Sociocultural Effects– E.g., food security, labor requirements

• Highlight Institutional Impediments to LUS Adoption

UCD/Embrapa

• Compare Across LUS – Trade-Offs/Synergies

Land Use System Analysis

• Spatial Resolution, Time Steps, and Temporal Extent– Single parcel of land, specific series of cropping activities,

specific production and water use technologies specific endspecific production and water use technologies, specific end date

– Annual time stepsMulti year duration– Multi-year duration

– Different intermediate and end usesField #1Field #1Year 1

Field #1Year 2 Field #1

Y 3Year 3 Field #1Year 4 Field #1

Year 10 Field #1

UCD/Embrapa

Year 15

Above-Ground Carbon vs. R t t L bReturns to Labor

140160

bon

ed)

wage rate

F t

Managed Forest

80100120140

roun

d ca

rbm

e av

erag Forest

Coffee/Bandarra

0204060

Abo

vegr

(t/h

a--t

im

Annual/Fallow

TraditionalPasture

Coffee/RubberCoffee/Bandarra

Improved FallowImprovedPasture

00 2 4 6 8 10 12 14 16 18 20 22

$R per person-day

UCD/Embrapa

Policy Experiments Using LUSPolicy Experiments Using LUS

UCD/Embrapa

Modeling the Buriti VermelhoSub-CatchmentSub Catchment

BrazilSan Francisco

River Basin

Brazil

UCD/Embrapa

A Spatially Distributed HydrologicA Spatially Distributed Hydrologic Model for Buriti Vermelho

UCD/Embrapa

A F L l E i M d l f BVA Farm-Level Economic Model for BV

• Objective:Objective:– Maximize farm profits

• Subject to:Subject to:– Agronomic constraints

• e.g., yields on given soilsg , y g– Household resource constraints

• Cash and family labor– Availability and costs of surface water and

groundwaterI t d d t i

UCD/Embrapa

– Input and product prices

BV M d l ’ T l d S ti lBV Models’ Temporal and Spatial Resolutions and Extents

Temporal ResolutionHydro model minutes

Spatial ResolutionHydro model 30m x 30m x

Econ model agricultural seasonsdepth-of-water-table gridsEcon model farm boundaries x depth-of-tube-

Spatial Extent

well

Temporal ExtentSpatial ExtentBuriti Vermelho sub-catchment area, both models

Temporal ExtentA decade, both models

UCD/Embrapa

Objective Functionj),,())(,(max zxpxx

ssiss irrirrsi si si

ewsijsjirrsinirrsisi cxwewqp∑ ∑ ∑−−

A i lt l P d ti F ti Effective Water

, , ,si si si

Crop Prices

Agricultural Production Function•Vector of Non-Irrigation Inputs (xnirr):

•Fertilizers, seeds, land, pesticides, machinery etc

Non-Irrigation Input Cost

ect e ateCost

• Irrigation Input Prices – pirr

• Irrigation Inputp , y•Effective Water – ew

•Function of Irrigation Inputs (xirr):•Applied water

Groundwater

• Price - wsj• Quantity - xsij

Irrigation InputQuantities - xirr

• z – Vector of Factors that

may affect•Groundwater•Surface water

•Irrigation Capital •Irrigation Labor

may affect groundwater extraction costs(e.g. water table

depth)

UCD/Embrapa

g•Irrigation Energy

depth)

Constraints

si lsLand: land B ,⎧ ≤⎪

∑

s

si lsi

si swi

,

Surface Water: sw B ,⎪⎪ ≤⎪⎪⎨

∑

∑ResourceConstraints

si fli

Family labor: B ,

Credit: c B

sfl⎨

≤⎪⎪⎪ ≤

∑

∑

Constraints

ssi ci

Credit: c B ,⎪ ≤⎪⎩

∑

∑ ∑Applied Water ∑ ∑≤+si si

sisisi awgwsw, ,

Applied WaterConstraint

Surface Applied

UCD/Embrapa

Surface Water Groundwater

ppWater

Hydrologic & Economic Model Linksy g

HYDROLOGIC• Crop-specific Algorithm to translate MODEL• poduction

• water use• irrigation efficiency

gcropping decisions into

water demand

Cropping Decisions Hydrologic Consequences

ECONOMICMODEL

• Water available for ag• surface water

Algorithm to translatehydrologic

consequences

UCD/Embrapa

O • surface water• groundwater

consequencesinto farm-level water

availability

Econ Data Requirements For BV ModelFor BV Model

• Input Quantity and Price per season, per crop, per farm: • Output Quantities and Prices farm:– land– fertilizers

p Q– per crop– per season

per farm– pesticides – seeds – labor and family labor

– per farm

• Costs of groundwater pumpingy

– machinery – irrigation inputs:

• applied water from

– Fixed costs of groundwater wells

– Depth from surface to water • applied water from surface and groundwater sources

• irrigation labor

ptable

C dit C t i t

UCD/Embrapa

• irrigation labor • irrigation capital• energy (kwh/ha)

• Credit Constraints

Structure of Basin-Wide Rainfall-R noff H drolog ModelRunoff Hydrology Model

UCD/Embrapa

Spatial Disaggregation of SFRB

UCD/Embrapa

B i Wid M d l ’ T l dBasin-Wide Models’ Temporal and Spatial Resolutions and ExtentsSpatial Resolution

Hydro model 14 large polygons

Temporal ResolutionHydro model month

Econ model Município

Hydro model monthEcon model agricultural season

Spatial ExtentSpatial ExtentSFRB, both models

Temporal Extent

UCD/Embrapa

Decades, both models

Econ Data Requirements For Basin Wide ModelBasin-Wide Model

• Input Quantity and Price per season per crop per • Output Quantities and Prices per season, per crop, per município:– land

f tili

p Q– per crop– per season

per município– fertilizers – pesticides – seeds

– per município

• Credit Constraints

– labor and family labor – machinery – irrigation inputs:irrigation inputs:

• applied water• irrigation labor

i i ti it l

UCD/Embrapa

• irrigation capital• energy (kwh/ha)

Hydrologic & Economic Model Linksy g

HYDROLOGIC• Crop-specific Algorithm to translate MODEL• poduction

• water use• irrigation efficiency

gcropping decisions into

water demand

Cropping Decisions Hydrologic Consequences

ECONOMICMODEL

• Water available for ag• surface water

Algorithm to translatehydrologic

consequences

UCD/Embrapa

O • surface water• groundwater

consequencesinto farm-level water

availability

Resolution vs Extent of Economic and Hydrology Modelingand Hydrology Modeling

Resolution (space and time t ) Extent (total space and time)

Dec

ades

step) Extent (total space and time)

Dec

ades

Extent

De

D

Tim

e

coupling

econ

ds hydrologicresolution

economicresolution

econ

ds

UCD/Embrapa

Millimeters Kilometers

Se

Space Millimeters Kilometers

Se

Space

Muito Obrigado!

UCD/Embrapa

Muito Obrigado!

UCD/Embrapa