Integrated Hydrologic - Economic modelling of river basins


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Presented at the Basin Focal Project Review meeting in Cali, Colombia from 1-5 Feb, 2008

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Integrated Hydrologic - Economic modelling of river basins

  1. 1. Integrated Hydrologic - Economic Modeling of River Basins ode g o e as s Claudia Ringler IFPRI UCD/Embrapa
  2. 2. An Example of a Typical River Basin… Precipitation Fishing g Hydropower Forest Reservoir Runoff River Basin Boundary Industry dust y Rura Urba Ub Rainfed Agr l n Return FlowWSS WSS Irrigation Recreation Groundwater Inflow Community Use Navigation Infiltration / Recharge Base Flow / Pumping Wetlands / Environ Groundwater Livestock …there is a need to understand how one Irrigation use/r affects other uses and users… Groundwater Outflow Figure based on Rao 2005 Ocean UCD/Embrapa
  3. 3. Growing Intersectoral Competition CHANGE GROWTH -T h l i Technologies - Economy - Environment - Population Agr - Urbanization Ind Quantity Dom Quality Env ENVIRONMENT - social ENVIRONMENT - legal - physical - political - technical - institutional - economic UCD/Embrapa
  4. 4. Economics versus Engineering in Basin Models • Hydrologic simulation models are important for real-time operation of dams & river systems • Economic optimization models are important for investment calculations • Optimization in simulation models is generally of limited use for water allocation based on f li i d f ll i b d economic efficiency purposes • Economic models without sufficient hydrologic representation is also of limited use • Joint hydrologic-economic models can be used for strategic decision-making in river UCD/Embrapa
  5. 5. Engineering-Economic Issues UCD/Embrapa
  6. 6. Engineering-Economic Issues UCD/Embrapa
  7. 7. Physical Social Geography Environment Politics Geology gy Economics Climatology Water W t Water W t Sociology S i l Meteorology Resources Demand Law Ecology Institutions ……. ….. Hydrology Water Resources Management g Control (Hard) Technology Adaptive (Soft) Technology Water Supply Flood Control Hydro Power ... Fees Taxes Subsi- Water dies Rights ... Solutions Feedbacks UCD/Embrapa
  8. 8. Model Structure Institutional Norms / Economic Incentives River Basin Maximization of net benefits Hydrologic H d l i system operation t ti Crop production/ Off-stream Instream uses Irrigation profits uses •Power generation •Salinity control Ground- Hydrop. Domestic water Profits Benefits D&I Irrigation g On-Farm water Industrial distribution Profits Hydrology / Supply Side Economics / Demand Side UCD/Embrapa
  9. 9. Compartment Modeling vs. Holistic Modeling Hydrologic sub-model i Hydrologic b H d l i sub-model d l Inter-relationships p Data exchanges Economic sub-model Economic sub-model E i b d l • Production function with water as an input • Environmental value (benefit) function • Investment/cost function: investment/cost infrastructure water yields UCD/Embrapa
  10. 10. Precipitation Runoff Other sources inflow Downstream economic outflow River reaches & reservoirs and environmental instream uses : hydropower, recreation, and requirements aquifer-river dilution return flow inter-flow diversion offstreamuses evapotranspiration & other comsumptiveuse Consumptive Distribution use system surface drainage surface precipitation water i it ti reuse industry water Industrial & drainage Agricultural municipal Treatment disposal/ demand sites demand sites treatment spillage loss groundwater groundwater percolation Groundwater tail water seepage pumping return flow Drainage seepage drainage collection system precipitation deep percolation river depletion Groundwater system UCD/Embrapa
  11. 11. RIVER BASIN NETWORK HYDROLOGY Ca1 MNSNT DN0a MPRNT IPRNT A1DN1 Node BE1 Ca2 Ca3 Ca4 A22VD1 Irrigation demand site A14aBE2 revDN MCTTN Domestic demand site BE2 A14bBE2 A27Ca1 ITHTN Industrial demand site MPLBP DN0b Reservoir SG1 Ls1 Ls2 Ls3 Ls4 revTM DN0c MLHLD A2DN2 SG2 BE3 A15BE3 DN1 MTPBT A28Ls1 VT1 A22VD1 A15BE3 A3DN3 VD1 A18bSG2 A18aSG1 MLNBP VD2 Lu1 Lu2 Lu3 Lu4 MDLLD MTHLA ITHTN THC LN1 A4DN4 DN2 A19bSG4 revDT BE4 A16BE4 A10LN1 WC A5DN5 A29Lu1 MBBBT DN3 LN2 MTTTN A23aVD2 Qu1 Qu2 Qu3 ITTTN VD3 revSQ SQ A23bVD3 EC BE5 A17BE5 DN4 LN3 A6DN6 A19aSG3 revHT DN5 LN4 revDmi A30Qu1 A19dSG6 A13aBE1 A13cBE1 A7DN7 IPTBT BE6 MPTBT A20cSG9 A8aDN8 DN6 Ct2 Ct3 A13bBE1 LN5 Ct1 A25VT1 VT2 A19cSG5 SG3 A8bDN8 A8cDN8 VD4 DN7 LN6 A20aSG7 A9DN9a A11LN2 A31Ct1 MTTLA A9DN9b SG4 DN8 A24VD4 A20dSG10 IDABD LN7 Ph1 Ph2 Ph3 A20bSG8 revTA A12aLN3 VD5 MDABD ITDBD A21aDN10 DN9 A13bLN4 A13aLN4 A12bLN3 A32Ph1 ITHLA A21bDN10 SG5 DN10 MXLDN A21cDN10 Di1 Di2 Di3 VD6 MTDBD A26bVT2 VT3 A26aVD5 MTDHC DN11 MBHDN MHTBT A33Di1 ITDHC SG6 DN12 IBHDN Ray1 Ray2 Ray3 DN13 VD7 A36aDN11 A34Ray1 DN14 A34Ray2 A36bDN12 MCDBV DN15 A36cDN13 Xoai1 Xoai2 Xoai3 A36dDN14 DN16 MBRBV A35Xoai1 IBRBV UCD/Embrapa
  12. 12. Economics – Benefit Functions Relating Water to Off-stream or Instream use M&I Water Uses - p(w) = p0(w0) (w/w0)α (i inverse demand function) d d f ti ) w ∫p ( w0 ) ⋅ (w / w0 ) − w ⋅ wp α VM ( w) = 0 w0 VM benefit from M&I water use (US$), w0 normal water withdrawal (m3) p0 willingness at w0 (US$) 500 Benefit (million US$) price elasticity, α=1/e 300 400 e 1/e n wp water price 200 100 B 0 0 200 400 600 800 1000 1200 1400 1600 Water withdrawal (million m3) UCD/Embrapa
  13. 13. Economics – Benefit Functions Relating Water to Off-stream or Instream use Crop Yield Function ya y= = a1 + a2 ⋅ w+ a3 ln w Yield as function of water, salinity, and ym irrigation t h l i i ti technology, a regression i a1 = b1 + b2 u + b3 c based on model experiments. a 2 = b4 + b5 u + b6 c a3 = b7 + b8 u + b9 c w s=0.3 s 03 water application relative to crop ET CUC=0.8 CUC=0.9 s=0.7 s 07 pp 2 s=1.2 s 1 p CUC=0.7 c salt concentration in water application (dS/m) Yield relative to max. crop yield 1 Yield relative to max. crop yield 1 u Christiensen Uniformity Coefficient (CUC). 0.8 0.8 0.6 06 m 0.6 06 0.4 0.4 0.2 0.2 0 0 0 1 2 3 4 0 1 2 3 4 Water relative to max. crop ET Water relative max. crop ET UCD/Embrapa
  14. 14. Economics – Benefit Functions Relating Water to Off-stream or Instream use Alternative Crop Yield Function ⎡ ⎤ ⎢ ⎥ ⎡γ 11 γ 12 γ 13 γ 1m ⎤ ⎡ ⎤ ⎢ x1 ⎥ ⎢γ ⎢ x1 ⎥ γ 22 γ 23 γ 2m ⎥ ⎢ ⎥ Y ( x1 , x2 ,..xi) = [α1 , α 2 , α 3 , α n , ] ⎢ x2 ⎥ + [x1 x2 x3 xn ] ⎢ 21 ⎥ ⎢ x2 ⎥ ⎢ ⎥ ⎢γ 31 γ 32 γ 33 γ 3m ⎥ ⎢ x3 ⎥ ⎢ ⎥ ⎢ x3 ⎥ ⎢ ⎥ ⎣γ n1 γ n 2 γ n3 γ nm ⎦ ⎢ ⎥ ⎢ xi ⎥ ⎣ xi ⎦ ⎣ ⎦ A quadratic yield function of water, investment, fertilizer, pesticides, machinery, labor, and seeds IRINV=20$/ha IRINV=60$/ha IRINV=100$/ha 15.0 Yie (mt/ha) ) 10.0 eld 5.0 0.0 0 0.5 1 1.5 2 2.5 UCD/Embrapa
  15. 15. Economics – Benefit Functions Relating Water to Off-stream or Instream use Benefits from wetland uses VW wd = ∑ wa wd , pd ⋅ wy wd ⋅ β − ∑ ( fd wd , pd ) 2 ⋅ dfw wd , pd pd pd − ∑ (l wd , pd ) 2 ⋅ dl wd , pd lw dlw pd Where 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 for normal Cambodia) dfw= damage coefficient for flows at wetland sites dlw = damage coefficient for lake storage at wetland site (only g g ( y for Cambodia) β = the adjustment factor (here: 1.1). UCD/Embrapa
  16. 16. Economics – Benefit Functions Relating Water to Off-stream or Instream Net Benefit Function, Example Lao PDR Wetland use UCD/Embrapa
  17. 17. Institutions: Organizations and Policies National or National or regional policies on water and economic development Regional agencies Basin policies on multiple purposes of water use water supply use, supply, hydropower, environmental Basin (sub-basin) authority and ecological requirements, water quality, flooding control, capacity expansion and O&M it i d Administrative units (states or provinces, Inter-regional agreements on water allocation and water trade counties or cities) ti iti ) Inter-sector water allocation, water right and markets, markets Irrigation Urban areas water prices and O&M cost, districts water use agreements, On-farm water management Farms UCD/Embrapa
  18. 18. Model Description – Holistic Approach Type: T Optimization Si l ti O ti i ti + 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/hydro State variables: River flows / reservoir storage / groundwater table / soil moisture / soil salinity Decision Variables: Crop acreage / water withdrawal & alloc./ reservoir release / groundwater pumping / capacity expansion / economic incentives UCD/Embrapa
  19. 19. Limitations Cannot be used for day-to-day river system operation Can be linked to poverty if water users are disaggregated by income levels, f ex levels f.ex. Focus on productive water uses manipulated by humans, and less on rainfed water management h dl i f d [where a lot of poverty persists], but the latter can be represented if it rainfed agriculture results in changes in inflows UCD/Embrapa
  20. 20. Modeling Water-Poverty Links: A Brief Overview of SFRB Methods Steve Vosti & SFRB Team February 2008 UCD/Embrapa
  21. 21. Estimating Impacts, Behavioral Changes, or Both • Ignore One or Both • Guess at One of Both • Generate Empirical Estimates – Very simply – e.g., general notions based on PRA exercises y py g,g – More complex – e.g., farm budgets, NR inventories, land use systems analysis – Very complex – e g bioeconomic models that simulate e.g., 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? – How much money do you have? UCD/Embrapa
  22. 22. 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/Outcomes • Inform Policy • Modeling at Three Spatial Extents – Plot-Level LUS Model – Buriti Vermelho Model – Basin-Wide Model UCD/Embrapa
  23. 23. One Tool -- LUS Analysis y • Focus on Land Use Systems (LUS) – Multi-year duration – Different intermediate and end uses • Estimate Economic Performance – Discounted 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 – E.g., food security, labor requirements • Highlight Institutional Impediments to LUS Adoption • Compare Across LUS – Trade-Offs/Synergies UCD/Embrapa
  24. 24. 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 end technologies date – Annual time steps – Multi year duration Multi-year – Different intermediate and end uses Field #1 Year 1 Field #1 Year 2 Field #1 Year 3 Y Field #1 Year 4 Field #1 Year 10 Field #1 Year 15 UCD/Embrapa
  25. 25. Above-Ground Carbon vs. Returns t L b R t to Labor wage rate Managed Forest 160 (t/ha--tim averag ed) bon 140 F round carb Forestt 120 100 me 80 Coffee/Bandarra Abovegr 60 Coffee/Rubber 40 Improved Annual/ Traditional Improved Fallow 20 Pasture Fallow Pasture 0 0 2 4 6 8 10 12 14 16 18 20 22 $R per person-day UCD/Embrapa
  26. 26. Policy Experiments Using LUS UCD/Embrapa
  27. 27. Modeling the Buriti Vermelho Sub Catchment Sub-Catchment Brazil San Francisco River Basin UCD/Embrapa
  28. 28. A Spatially Distributed Hydrologic Model for Buriti Vermelho UCD/Embrapa
  29. 29. AF Farm-Level Economic Model for BV L lE i M d lf • Objective: – Maximize farm profits • Subject to: – Agronomic constraints • e.g., yields on given soils g,y g – Household resource constraints • Cash and family labor – Availability and costs of surface water and groundwater –IInput and product prices t d d t i UCD/Embrapa
  30. 30. BV M d l ’ T Models’ Temporal and S ti l l d Spatial Resolutions and Extents Spatial Resolution Temporal Resolution Hydro model 30m x 30m x Hydro model minutes depth-of-water-table grids Econ model agricultural seasons Econ model farm boundaries x depth-of-tube- well Spatial Extent Temporal Extent Buriti Vermelho sub-catchment A decade, both models area, both models UCD/Embrapa
  31. 31. Objective Function j max ∑ psi qsi (x nirrs , ewsi (xirrs )) − ∑ wsj xsij − ∑ cewsi (pirr , xirrs , z) i,s i,s i ,s Effective Water ect e ate Agricultural Production Function A i lt l P d ti F ti Cost •Vector of Non-Irrigation Inputs (xnirr): • Irrigation Input Crop •Fertilizers, seeds, land, Non-Irrigation Prices – pirr Prices p pesticides, machinery etc , y Input Cost • Irrigation Input •Effective Water – ew • Price - wsj Quantities - xirr •Function of Irrigation Inputs (xirr): • Quantity - xsij • z – Vector of •Applied water Factors that •Groundwater Groundwater may affect •Surface water groundwater extraction costs •Irrigation Capital (e.g. water table •Irrigation Labor g depth) •Irrigation Energy UCD/Embrapa
  32. 32. Constraints ⎧Land: ∑ landsi ≤ Bls , ⎪ i ⎪Surface Water: sw ≤ B , Resource ⎪ ⎪ ∑ si sws i Constraints ⎨ ⎪Family labor: ∑ flsi ≤ Bfl s , ⎪ i ⎪Credit: ∑ csi ≤ Bc , ⎪ ⎩ i s Applied Water Constraint ∑ swi ,s si + gwsi ≤ ∑ awsi i ,s Surface Applied pp Groundwater Water Water UCD/Embrapa
  33. 33. Hydrologic & Economic Model Links y g • Crop-specific Algorithm to translate g HYDROLOGIC • poduction cropping decisions into MODEL • water use water demand • irrigation efficiency Cropping Decisions Hydrologic Consequences Algorithm to translate ECONOMIC • Water available for ag hydrologic O MODEL consequences • surface water into farm-level water • groundwater availability UCD/Embrapa
  34. 34. Econ Data Requirements For BV Model • Input Quantity and Price per season, per crop, per farm: • Output Q p Quantities and Prices – land – per crop – fertilizers – per season – pesticides – per farm – seeds • Costs of groundwater – labor and family labor y pumping – machinery – Fixed costs of groundwater – irrigation inputs: wells • applied water from – Depth from surface to water p surface and table groundwater sources • irrigation labor • C dit C t i t Credit Constraints • irrigation capital • energy (kwh/ha) UCD/Embrapa
  35. 35. Structure of Basin-Wide Rainfall- Runoff Hydrology R noff H drolog Model UCD/Embrapa
  36. 36. Spatial Disaggregation of SFRB UCD/Embrapa
  37. 37. Basin-Wide Models’ Temporal and B i Wid M d l ’ T l d Spatial Resolutions and Extents Spatial Resolution Hydro model 14 large polygons Econ model Município Temporal Resolution Hydro model month Econ model agricultural season Spatial Extent SFRB, both models Temporal Extent Decades, both models UCD/Embrapa
  38. 38. Econ Data Requirements For Basin-Wide Basin Wide Model • Input Quantity and Price • Output Q p Quantities and Prices per season, per crop, per season crop município: – per crop – land – per season – f tili fertilizers – per município – pesticides • Credit Constraints – seeds – labor and family labor – machinery – irrigation inputs: • applied water • irrigation labor • i i ti capital irrigation it l • energy (kwh/ha) UCD/Embrapa
  39. 39. Hydrologic & Economic Model Links y g • Crop-specific Algorithm to translate g HYDROLOGIC • poduction cropping decisions into MODEL • water use water demand • irrigation efficiency Cropping Decisions Hydrologic Consequences Algorithm to translate ECONOMIC • Water available for ag hydrologic O MODEL consequences • surface water into farm-level water • groundwater availability UCD/Embrapa
  40. 40. Resolution vs Extent of Economic and Hydrology Modeling Resolution (space and time Extent (total space and time) step) t ) Decades Decades Extent D D Time e coupling economic econds econds hydrologic resolution resolution Se Se Millimeters Kilometers Millimeters Kilometers Space Space UCD/Embrapa
  41. 41. Muito Obrigado! UCD/Embrapa
  42. 42. Muito Obrigado! UCD/Embrapa