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Hydrology and Earth System Sciences An interactive open-access journal of the European Geosciences Union
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Volume 19, issue 9
Hydrol. Earth Syst. Sci., 19, 3925–3935, 2015
https://doi.org/10.5194/hess-19-3925-2015
© Author(s) 2015. This work is distributed under
the Creative Commons Attribution 3.0 License.
Hydrol. Earth Syst. Sci., 19, 3925–3935, 2015
https://doi.org/10.5194/hess-19-3925-2015
© Author(s) 2015. This work is distributed under
the Creative Commons Attribution 3.0 License.

Research article 23 Sep 2015

Research article | 23 Sep 2015

Definition of efficient scarcity-based water pricing policies through stochastic programming

H. Macian-Sorribes1, M. Pulido-Velazquez1, and A. Tilmant2 H. Macian-Sorribes et al.
  • 1Research Institute of Water and Environmental Engineering (IIAMA), Universitat Politècnica de València, Valencia, Spain
  • 2Department of Civil and Water Engineering, Université Laval, Québec City, Québec, Canada

Abstract. Finding ways to improve the efficiency in water usage is one of the most important challenges in integrated water resources management. One of the most promising solutions is the use of scarcity-based pricing policies. This contribution presents a procedure to design efficient pricing policies based on the opportunity cost of water at the basin scale. Time series of the marginal value of water are obtained using a stochastic hydro-economic model. Those series are then post-processed to define step pricing policies, which depend on the state of the system at each time step. The case study of the Mijares River basin system (Spain) is used to illustrate the method. The results show that the application of scarcity-based pricing policies increases the economic efficiency of water use in the basin, allocating water to the highest-value uses and generating an incentive for water conservation during the scarcity periods. The resulting benefits are close to those obtained with the economically optimal decisions.

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Short summary
One of the most promising alternatives to improve the efficiency in water usage is the implementation of scarcity-based pricing policies based on the opportunity cost of water at the basin scale. Time series of the marginal value of water at selected locations (reservoirs) are obtained using a stochastic hydro-economic model and then post-processed to define step water pricing policies.
One of the most promising alternatives to improve the efficiency in water usage is the...
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