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Improving the Performance of Water Policies: Evidence from Drought in Spain

International Institute for Applied Systems Analysis (IIASA), Water Program, Laxenburg 2361, Austria
Department of Agricultural Economics, Centro de Investigación y Tecnología Agroalimentaria–Diputación General de Aragón (CITA-DGA), Avenida Montañana 930, Zaragoza 50059, Spain
School of Public Policy, University of California, Riverside, CA 92521, USA
Department of Economic Analysis, University of Zaragoza, Zaragoza 50018, Spain
Department of Economics and Social Sciences, Polytechnical University of Valencia, Valencia 46022, Spain
Author to whom correspondence should be addressed.
Academic Editors: Magaly Koch and Thomas M. Missimer
Water 2016, 8(2), 34;
Received: 23 November 2015 / Revised: 12 January 2016 / Accepted: 18 January 2016 / Published: 22 January 2016
(This article belongs to the Special Issue Water Resources Assessment and Management in Drylands)
PDF [727 KB, uploaded 22 January 2016]


Water scarcity is a critical environmental issue worldwide, especially in arid and semiarid regions. In those regions, climate change projections suggest further reductions in freshwater supplies and increases of the recurrence, longevity and intensity of drought events. At present, one important question for policy debate is the identification of water policies that could address the mounting water scarcity problems. Suitable policies should improve economic efficiency, achieve environmental sustainability, and meet equity needs. This paper develops and applies an integrated hydro-economic model that links hydrological, economic and environmental elements to such issues. The model is used to conduct a direct comparison of water markets, water pricing and institutional cooperation, based on their economic, environmental and equity outcomes. The analysis is performed in the Jucar Basin of Spain, which is a good natural experiment for studying water scarcity and climate change policies. Results indicate that both institutional and water market policies are high performing instruments to limit the economic damage costs of droughts, achieving almost the same social benefits. However, the environmental effects of water markets are worrying. Another important finding is that water pricing is a poor policy option not only in terms of private and environmental benefits but also in terms of equity. View Full-Text
Keywords: water scarcity; climate change; water policies; hydro-economic modeling; economic and environmental benefits water scarcity; climate change; water policies; hydro-economic modeling; economic and environmental benefits

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Kahil, M.T.; Albiac, J.; Dinar, A.; Calvo, E.; Esteban, E.; Avella, L.; Garcia-Molla, M. Improving the Performance of Water Policies: Evidence from Drought in Spain. Water 2016, 8, 34.

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