Economic Assessment of Water Resources Management Strategies

Abstract

This paper presents an economic framework of all potential benefits and costs arising from present activities and implementation of policies; including crop production costs, capital and operating costs of development projects, environmental costs, pumping costs, and costs imposed by reduced crop production. The methodology was applied for a water resource system of Rafsanjan Plain, in the central part of Iran. The water supply and demand system of the region was simulated into two different models. The former was a decision support system (DSS)-based model, and the latter was a system dynamics-based model. Despite some minor differences, the principal characteristics of the region was similarly simulated in both models. Then, management scenarios were generated considering different strategies including the interbasin water transfer, improvements in irrigation techniques, limiting future expansion of cultivated area, and restricting withdrawal from groundwater. By combining these strategies, various scenarios could be generated. To evaluate the scenarios, the net present value (NPV) factor, and a multi criteria decision making (MCDM) model are used to evaluate the scenarios. The entropy information theory is also used to calculate the weights of different criteria in ranking different scenarios. This study demonstrates how combining multiple tools and techniques along with an economic framework could effectively assist decision makers to understand the consequences of a taken strategy in a specific region. The results show that despite the shortage of water resources in this area, interbasin water transfer is not viable.