Hydro-Economic Modelling for Water-Policy Assessment Under Climate Change at a River Basin Scale: A Review

Abstract

Hydro-economic models (HEMs) constitute useful instruments to assess water-resource management and inform water policy. In the last decade, HEMs have achieved significant advances regarding the assessment of the impacts of water-policy instruments at a river basin or catchment level in the context of climate change (CC). This paper offers an overview of the alternative approaches used in river-basin hydro-economic modelling to address water-resource management issues and CC during the past decade. Additionally, it analyses how uncertainty and risk factors of global CC have been treated in recent HEMs, offering a discussion on these last advances. As the main conclusion, current challenges in the realm of hydro-economic modelling include the representation of the food-energy-water nexus, the successful representation of micro-macro linkages and feedback loops between the socio-economic model components and the physical side, and the treatment of CC uncertainties and risks in the analysis.