Introduction
The increase in global population has placed stress on water resources, in some locations critically.This scarcity of water is due to factors such as: lack of infrastructure for distribution and treatment, inefficient water use, and poor environmental management.Many countries recognize the need for careful and sustainable resource management and have started development andimplementation of comprehensive water resource plans. Current approaches to solving water resources problems however, tend to focus either on development of additional sources (supply-side management), or on management of the demand for water.

In the methodology of the Water Allocation System (WAS),the two ideas are brought together in a comprehensive manner.Furthermore, the social aspects of water management aretreated explicitly. By combiningCRA’s expert knowledge in the field of economics and WL | DELFT HYDRAULICS extensive experience in the field of water resources management we have developed a very powerful instrument that comprehensively treats supply and demand, in both an economic and social context.


The Concept
The Water Allocation System (WAS) allows for the evaluation of alternative strategies for socially and environmentally sustainable development of water resources.Standard approaches to water management do not typically treat water as an economic good, where WAS explicitly includes the fact that the quantity of water demanded varies with price.In addition, WAS goes further than including strictly market-based economics by allowing for the incorporation of policies that reflect the social and environmental importance of water. These policies can be in the form of subsidies, price policies, and either maximum or minimum quantities to be provided to certain users or for environmental purposes.WAS finds the optimal allocation of water resources by maximizing net social welfare for a region.

Net social welfare is a measure of direct and indirect social gains from the use of water.All costs are accounted for in the solution of the tool.One of the results from the tool is the value of water for each water source in various locations in the area.The value of water should be understood to be the social and economic value that contributes to social welfare.This value should not be confused with water prices charged to consumers, which may be set independently.The values determined by the tool can be used to assess infrastructure investment, which may include water treatment, the capacity of plants and water conveyance systems.WAS could find water management strategies that would otherwise go undiscovered, as direct, indirect, and system-wide effects are accounted for.


The Decision Support Tool
The Water Allocation System is a user friendly decision support tool for the analyses of regional water allocation in a social and economic context.The region is divided into a number of districts. Each district is treated as a separate economic unit.Economic activities, production, consumption, prices, and welfare are measured separately for each district.The only commodity in the tool is water. WAS accounts for surface water and ground water resources, where for each resource different water qualities can be taken into account.The present version of WAS is based on average annual quantities.If appropriate, development of inter-seasonal or multi-year tools will be undertaken as part of future projects.
Water is used for many different purposes (e.g. households, industry, agriculture, power and the environment). In the model, the water demand of each private user category is characterized by a relation between price and quantity (demand curve). Recycling of effluent from public water supply to irrigation can be taken into account. For the determination of the demand curve for agriculture an Agricultural Sub-Model (AGSM) is available (see below).
The movement of water between districts can be viewed as trade between districts. In the model, users can specify conveyance links. A link is characterized by a district of origin and destination, a capacity and a transport cost in $/m3.
The Water Allocation System (WAS) can be used for water management and/or conflict resolution among parties sharing a common water resource.


Water Management
WAS can be used to evaluate current and future water management issues. It is important to note that such evaluation is system-wide. In particular, it takes account of the opportunity cost of water everywhere in the studied region. Possible applications include:

Conflict Resolution
 
WAS allows users in situations of conflict or competition for scarce water resources to examine the impact of various levels of ownership or allocation. Also WAS can be used to explore opportunities for cooperation.The tool is particularly useful in its application to dispute resolution by showing the joint gains from trade or reallocation of water resources among the competing parties.These gains may be realized by simple trade where one party values the resource higher than the other party.The power of WAS comes in finding opportunities for cooperation between competing parties that other approaches to water modeling  are likely to miss.For example, it may be advantageous for competing parties to invest in joint infrastructure. Where there is competition between urban and agricultural water use, it may be advantageous to invest in recycling infrastructure: more fresh water can then be transferred to urban use, and in exchange, recycled water transferred to agricultural water use.Our decision support tool can identify not only where this kind of cooperation is beneficial, but when and to what capacity.The tool can also simulate drought conditions, and identify options for water allocation in times of short-run water scarcity.

The Agricultural Sub-Model AGSM
The Agricultural Sub-Model optimizes the crop distribution in a district, taking into account the availability of water and land, and the relative values of various crops and costs of inputs. AGSM is a seasonal model, in which different water qualities can be taken into account.
 
Input data are:
  • the crops that can be grown in the district;
  • the water requirement per crop and per season;
  • the income generated by crop production, computed as crop yield multiplied with the crop value minus the cost of non-water inputs;
  • constraints on water and land availability.
 
If AGSM is used with the price of water given, it will compute the optimal cropping pattern taking into account the specified water- and land constraints. AGSM can also be used to derive the agricultural demand curve.


WL | Delft Hydraulics
Founded in 1927, WL | delft hydraulics is an independent consulting and research institute located in the Netherlands. For more than 70 years, we have been providing clients, at home and abroad, with decisive advice and technical assistance on water-related issues. These projects range from applied research and consultancy queries to multidisciplinary policy studies. Our current staff of 400 qualified and committed professionals combine an in-depth command of critical details with an across-the-board overview.


Clients
Our national and international clients include government authorities, policy makers and administrators responsible for the short- and long-term governance of bodies of water and related infrastructures. Our clients are also in the private sector: for example, among multilateral agencies, consulting engineers, contractors, and in industry. They all have one thing in common: the need for solid, practical advice. They come to us because they know that we understand their concerns and are prepared to approach their questions from independent, fresh perspectives.


Our Services
WL | delft hydraulics has a long-standing reputation for excellence in hydrology, hydraulics, morphology, water quality and ecology. Construction and design matters related to offshore, coasts, harbors, estuaries, rivers and canals, and industry - also our forte - are approached in a manner tuned to the specific requirements of the client. In addition, we operate at the policy level by delivering decision support and carrying out environmental impact assessments in the above mentioned working areas.
We have a full range of experimental facilities and computer programs - most of which have been developed and validated by our experts in residence. On the basis of a sound understanding of the processes involved, all water systems can be simulated by us, numerically, experimentally, or through a combination of the two. At WL | delft hydraulics, transfer of technology and know-how is an inherent part of our approach. This is done through a variety of training courses and seminars, and on the job.




Charles River Associates

Charles River Associates is an economics, finance, and business consulting firm serving clients worldwide. Founded in 1965, CRA has completed more than 3,000 projects for law firms, corporations, and government agencies from around the world.

CRA’s Litigation and Regulation group provides economic and financial analysis, expert testimony, and other support to clients involved in legal or regulatory proceedings. Our Business Consulting group combines expertise in microeconomics, technology, industries, and markets to assist clients with business strategy, market assessment, and technology assessment.

Charles River Associates & WL | Delft Hydraulics

Demands of increased production and economic growth are frequently coming in direct - and public - conflict with environmental concerns. Balancing the needs of one with those of the other, not only for today, but also for the future, is often expressed in the phrase “sustainable development”. No simple matter, it makes our clients' jobs more demanding. In turn, they demand more of us, not only for construction- and design- related issues, but also for far-reaching policy and management concerns. They expect and get from us optimal performance: a multidisciplinary, scientifically rigorous approach linked to cost-conscious good business sense.




 
 

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