Water management is gaining greater importance due to water scarcity that occurs worldwide. Current trends are in line to improve efficiency in resource management also considering economic efficiency. In this latter respect, the European Union (through the Water Framework directive (WFD), 2000) has emphasized raising cost recovery mechanisms for this purpose, among which includes the approach of efficient policies for water pricing.
Water as a scarce resource is an asset that has high value for those who require it. Therefore it does not enough to perform the hydrologic study alone, it is necessary to consider economic aspects to evaluate the efficiency in supplying the demands of the operating system. In an economically efficient allocation, the marginal benefit of resource use must be equal for all sectors, in order to maximize social welfare. In other words, the benefit of using an additional unit of resource in one sector should be the same as in another sector. The water-pricing policies are established to ensure that the allocation of water resources among competing uses and users is efficient, equitable and sustainable. In practice, water is systematically assigned a price below its real value. This is evident when one observes that often the quantity demanded exceeds supply. The emphasis on income adequacy promotes the idea of charging average prices. If the unit price is equal to the average price, revenue equals total costs. However, it is important to identify and incorporate marginal costs (in price) so as to transmit a signal to users of resource value and scarcity through price.
This thesis presents a methodology that allows the practical assessment of opportunity costs of the water resource (MORC) at the catchment scale and the implications for the design of an efficient pricing water (basin-scale) in Spain taking into account the requirements of the WFD. The proposed methodology is based on the development of hydro-economic models at the catchment scale. It begins with the hydrological and economic characterization of the system through monthly inflow series to the system, the application of the continuity equation at the nodes of the proposed plan and the equation of balance in the reservoirs of the system, including the empirical equations that determine losses due to seepage and evaporation in reservoirs and pipelines. The economic characterization involves the use of economic demand functions for each application that makes up the system.
The MORC is estimated using two approaches: simulation of management according to current priorities and modus operandi and economic optimization. The first approach considers the simulation of hydro-economic management system, utilizing two modules of the Decision Support System AquaTool: the simulation module (SimGes) and economic evaluation (EcoWin). The results of the monthly supply of the resource simulated with SimGes, together with the functions of the economic value of water in different uses and operating costs, are inputs into the economic evaluation model which approximates the MORC value by comparing economic results of the base case simulation with simulations of management systems providing an additional unit of water in each time period in the selected location. The economic optimization approach maximizes the net economic value of water use during the optimization. Is optimized at large monthly hydrologic series, representing the range of probable hydrologic events in the future, getting the flow of water into the system during the period optimized and associated economic results.
The results obtained from the economic evaluations, serve as a starting point for the design of pricing policies whose effect has been analyzed again using the simulation model. Improved economic efficiency resulting from the application of pricing policies is assessed by comparing the results obtained by simulating the actual operation of the system (as per priority) and that obtained with the simulation of the pricing. The optimization model results indicate the maximum attainable economic efficiency, which serves as a benchmark. The distance between the simulated benefits with the current management and maximum benefits obtained from the optimization show the profit margin that can act on pricing policies.
It can define efficient pricing with price steps for CMOR average values of simulation and optimization for different ranges of volume of reservoir. It posed a synthetic scheme for the application of the methodology proposed, observed that the economic performance of the system, specifically marginal opportunity resource coste (MORC) apart from being an indicator of resource scarcity in the system can be used as the basis for the establishment of efficient pricing policies. In the synthetic case study, assume staggered price averages derived from CMOR simulation model leads to economic benefits already captured 80% of the gap between management without pricing and the management with optimized theory. Pricing policies as well from the base of the CMOR system in reservoirs, may take into account both the volume impounded as previous inflow to the reservoirs. The pricing that is more efficient than another depends on many factors that are inherent to the complexity of the system. These may include time-dependent structure of the inflow series and the statistical droughts properties of the system, configuration and infrastructure characteristics of the system, regulatory capacity, etc.
The methodology for the design of efficient pricing water is innovative and may incorporate in any simulation model for managing water resources system that has defined the relevant demand curves. Using the alarm indicators from the SimGes module (SSD Aquatool), the prices become into supply constraints to the demands of the system. The pricing policy proposal is thus defined as a set of constraints that produce changes in the supply to demand when the management is simulated. The information obtained can be used to calculate the benefits on the pricing policy considered
The methodology was applied to a real case study (Mijares River basin) where the hypotheses were confirmed for the synthetic case. The results are particularly useful for establishing efficient pricing policies that enhance economic benefits and make efficient resource allocation to different uses of the system.