1. Stockholm World Water Week Session: Hydroeconomic Modeling in Basins: Practice, Challenges and Rewards August 22, 2011 1530 - 1845 Watershed Policy Analysis in the Rio Grande: Insights from Hydroeconomic Modeling Frank A. Ward New Mexico State University USA

2. Ongoing Challenges in Many Basins Adaptation to droughts, floods, climate change Search for resilient water institutions where there are complex watershed processes and constraints – Agronomic – Hydrologic – Meteorologic – Economic – Political Search for Just, Flexible, Open Water Sharing Agreements Science-informed policy that’s understandable

3. Road Map Describe Potential Benefits of HM Graphics Describe history of one river basin sharing debate (Rio Grande Compact), resulting agreement Describe principles for framing water sharing debates. Show how HEM’s can inform water sharing debates Brief look at one HEM (Rio Grande) Illustrate the use of HEM for policy analysis Conclusions

4. A Role for Hydroeconomic Models? HM can provide data to inform debates on: – Adaptation to floods, drought, climate change – Ways to share transboundary waters – Irrigation water conservation subsidies – New knowledge or method (e.g., evaporation, ET) – Socially just, economically efficient, politically acceptable water infrastructure – Effective development planning – Cost effective Payment for Environmental Services

5. Search for Simple Graphics to inform complex watershed policy debates Watersheds are scientifically complex Policy debates add complexity Few simple graphics can show the choices

6. History’s Great Graphic: Summarizes Napoleon’s disastrous invasion of Russia in 1812-1813 (Charles Minard, 1869) – Army size (including reserves) by location – Direction of movement – Temperature during retreat by date and location – Limit: Doesn’t show the counterfactual

7. Water Balance: Rio Grande Rio Grande from Colorado (USA) to US-Mexico border with supplies, gauged flows and depletions by location Impacts of wet, normal, dry inflows Impact of water sharing agreement – Rio Grande Compact – US Endangered Species Act – US Mexico Treaty of 1906 – New Mexico – Texas water sharing agreement (2008)

10. Limits of Basin Graphics Economic and policy goals: sustainability, sustainable diversion reductions, resilient institutions, minimum econ losses from drought, flood, climate change In economics, water flows and stocks are inputs. Economic benefits and their just distribution are more important aims. So we turned to mathematical models of hydrology, agronomy, economics, and institutions

11. Water Sharing in River Basins: History of Rio Grande Compact Settlement in southern Colorado USA, late 1800s Southern NM, El Paso, TX and Ciudad Juarez, MX reduced flows US-MX Treaty of 1906: 60,000 AF/yr to MX US Built Elephant Butte Dam (1916) for treaty flows Lawsuits in the early 1900s over growing demands for shrinking supplies. Increasing any use reduced another supply. CO-NM-TX: mutual mistrust. 1920: recognized need for 3 state flow sharing agreement 1929: draft agreement reached.

12. Actual sharing arrangement hammered out for Rio Grande 9 years debate, experiment, negotiation (29-38) Signed in 1938 Based on a creative combination of: – Observing historical use patterns – Mathematical formula for predicting historical use – Formula explained how historical use varied in wet v. dry years. – Formula was applied to share water for the future in wet and dry conditions.

13. Rio Grande Compact Water Sharing Formula CO deliveries to NM NM deliveries to TX

14. Historical Flows into Iraq: Tigris-Euphrates, BCM/yr (1933-2009) Euphrates = 27.7 – 9.7 * year_after_1992 Tigris = 21.3 – 6.25 * year_after_1997

15. Negotiations: haves, lacks, wants: e.g., RG Compact CO: little carryover storage, wanted dry year flows. Formula reflects that. Low deliveries by CO to NM-TX when supplies are low. NM: some carryover storage, didn’t need all dry year flows, wanted a growing % of wet year flows. Formula shows that growing %. TX: 4 years carryover storage. TX gives NM a high % of dry-year flows as to trade for high % flood flows into storage.

16. Principles to Frame Transboundary Water Sharing Agreements Equitable and reasonable use Obligation to avoid significant harm Cooperation Information exchange Notification Consultation Peaceful dispute settlement Rahaman, Finland, 2009, IJWRD, Ganges

17. Transboundary Water Sharing Procedures Equal shares of natural supplies (1/3 for ea for 3 states) Proportional Sharing – Based on land – Based on population – Based on contribution to supply 17

18. Transboundary Water Sharing Procedures Historical Use Each community delivers a known quantity of water to its downstream border. How much? Could be fixed (US-MX in upper RG Basin) or formula based (3 states) because historical use varies – Past years – Past seasons – Past crops – Due to past variable natural inflows – Due to water users leaving basin 18

19. Other Sharing Procedures Based on each country’s need. How to measure? Based on each country’s productivity of water. In USA, California would get most of the water Based on each country’s subsistence need (e.g. drinking) Based on historical use that would have occurred had the country been democratic. E.g, Ethiopia, Nile Based on what each country can get and keep from others. 19

20. Advantages of Transboundary Water Sharing Agreement Each state develops water independently, needing only to meets downstream obligations…new lands, new reservoirs, growing populations,… Reduces uncertainty – Future population – Future industry, environmental needs – Each state finds own institutions to develop water to meet growing demands, needs only to meet downstream deliveries. E.g, gw pumped into river: CO - NM. – Each state sets up its own water rights system, thanks to supply certainty.

21. Role of Hydro-economic Basin Analysis to Inform Water Sharing Proposals Historical outcomes by country, use, location, and period under actual water sharing agreements – Inflows: headwater supplies – Hydrologic: streamflows, reservoir levels – Agricultural: Irrigated land, farm income, yields, prodn, food self sufficiency – Urban: population, per capita use, price, supply reliability – Environmental: key ecological assets – Economic: Total economic benefits

22. Role of Hydro-economic Basin Analysis to Inform Water Sharing Proposals Historical outcomes by country, use, location, and period under potential water sharing agreements – Inflows: headwater supplies – Hydrologic: streamflows, reservoir levels – Agricultural: Irrigated land, farm income, yields, prodn, food self sufficiency – Urban: population, per capita use, price, supply reliability – Environmental: key ecological assets – Economic: Total economic benefits

23. Role of Hydro-economic Basin Analysis to Inform Water Sharing Proposals Future outcomes by country, use, location, and period under actual water sharing agreement A – Inflows: headwater supplies – Hydrologic: streamflows, reservoir levels – Agricultural: Irrigated land, farm income, yields, prodn, food self sufficiency – Urban: population, per capita use, price, supply reliability – Environmental: key ecological assets – Economic: Total economic benefits

24. Role of Hydro-economic Basin Analysis to Inform Water Sharing Proposals Future outcomes by country, use, location, and period under potential water sharing agreement A – Inflows: headwater supplies – Hydrologic: streamflows, reservoir levels – Agricultural: Irrigated land, farm income, yields, prodn, food self sufficiency – Urban: population, per capita use, price, supply reliability – Environmental: key ecological assets – Economic: Total economic benefits

25. Use of hydroecomic model Impacts of alternative policy, supplies, or population by country, use, location, period. – Inflow differences: historic v potential – Hydrologic differences: historic v. potential – Agricultural differences: historic v. potential – Urban differences: historic v. potential – Environmental differences:historic v. potential – Economic differences: Benefits of new policy compared to historic policy. How these changes in benefits vary by alternative future supplies or future populations

27. Example Structure of Hydroeconomic River Basin Analysis: Upper Rio Grande

28. 28 Objective

29. Irrigable land, Headwater supplies Sustain key ecological assets Hydrologic balance Reservoir starting levels (sw, gw) Reservoir sustainability constraints (sw, gw) Institutional – Endangered Species Act – Rio Grande Compact (CO-NM; NM-TX) – US Mexico Treaty of 1906 – Rio Grande Project water sharing history (NM/TX) 29 Constraints

30. E.g.: Lobatos gauge (CO-NM border): X(Lobatos_v,1) = X(RG_h,1) - X(SLV_d,1) + X(SLV_r,1) 30 Gauged Flows: Hydro Balance

31. 31 Ag water use

32. 32 Reservoir Stocks

33. 33 Institutions: e.g. Rio Grande Compact

34. U.S. Mexico Groundwater Sharing Treaty U.S. Mexico Water Quality Treaty Limiting domestic well development Adjudicate MRG water rights 34 Potential Institutional Constraints

35. Example Results: Rio Grande Basin Policy: Subsidize drip irrigation with an upper bound on existing depletions to meet downstream delivery obligations with changing policy

36. Economic Value of Water by Supply, Source, and Drip Irrigation Subsidy, Rio Grande Project, $US/Acre Foot Depletion Water Supply Scenario Water source % Capital Subsidy, Drip irrigation 0255075100 normalsurface0.0011.5823.1634.7546.33 normalground0.00 drysurface69.3579.0089.54101.12112.70 dryground0.00

37. Conclusions and Future Directions Hydroeconomic Model Advances – Theory – Model design – Computational technique/speed Needs: Optimization on water development (gw, reservoirs, purification plants, recycling) Needs: Optimization of water institutions (trans-boundary water sharing, water rights, adjudication, groundwater treaties)