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Economic Modelling for Water Quantity and Quality Management: A Welfare Program Approach

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  • Xueqin Zhu
  • Ekko Ierland

Abstract

This paper presents an integrated economic model which is able to explicitly address both water quantity and quality. We use a welfare program to maximize social welfare subject to the economic and ecological constraints, where interactions, emissions and environmental impacts are incorporated. Such a welfare program can provide the marginal values of commodities and therefore can price water by means of shadow pricing. The optimal solution to a specified program provides the optimal response strategies, i.e. the efficient allocation of resources in the economy including water use and the efficient level of water quality. We illustrate the mechanism in a numerical example and show, as an example, how we can achieve efficiency by reserving water in the high season for times of high demand in the low season and by introducing price differentiation between the two seasons. Copyright The Author(s) 2012

Suggested Citation

  • Xueqin Zhu & Ekko Ierland, 2012. "Economic Modelling for Water Quantity and Quality Management: A Welfare Program Approach," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(9), pages 2491-2511, July.
    • Handle: RePEc:spr:waterr:v:26:y:2012:i:9:p:2491-2511
    DOI: 10.1007/s11269-012-0029-x
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    Cited by:

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    3. Atalel Wubalem & Teshale Woldeamanuel & Zerihun Nigussie, 2023. "Economic Valuation of Lake Tana: A Recreational Use Value Estimation through the Travel Cost Method," Sustainability, MDPI, vol. 15(8), pages 1-20, April.
    4. Nadine Wittmann, 2014. "A Microeconomic Perspective on Water Resources Management: Analyzing the Effects on Optimal Land Rents Along a River Basin," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(5), pages 1309-1325, March.
    5. Liliana Hawrysz & Joachim Foltys, 2015. "Environmental Aspects of Social Responsibility of Public Sector Organizations," Sustainability, MDPI, vol. 8(1), pages 1-10, December.
    6. Zhang, Lei & Zhu, Xueqin & Heerink, Nico & Shi, Xiaoping, 2014. "Does output market development affect irrigation water institutions? Insights from a case study in northern China," Agricultural Water Management, Elsevier, vol. 131(C), pages 70-78.
    7. E. Cabrera & M. Pardo & E. Cabrera & F. Arregui, 2013. "Tap Water Costs and Service Sustainability, a Close Relationship," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(1), pages 239-253, January.
    8. Jason F. L. Koopman & Onno Kuik & Richard S. J. Tol & Roy Brouwer, 2017. "The potential of water markets to allocate water between industry, agriculture, and public water utilities as an adaptation mechanism to climate change," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 22(2), pages 325-347, February.
    9. Zhisong Chen & Huimin Wang & Xiangtong Qi, 2013. "Pricing and Water Resource Allocation Scheme for the South-to-North Water Diversion Project in China," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(5), pages 1457-1472, March.

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