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This study describes an economic model in the Guadalquivir river basin (Southern Spain) that considers inter-sectoral and hydrological effects of changes in water use as a response to various water-pricing policy scenarios. The main economic variables include water use, gross regional product, return flows in the river basin, and employment at sectoral and basin levels. The response of the different sectors to water pricing and of the sectoral productivity is derived from official data. The background of the model is based on previous research for the implementation of the UN System of Environmental-Economic Accounts and on the application of this framework to the Guadalquivir basin. Results based on the elicited curves illustrate that the structure of the demand function for irrigated agriculture passes from inelastic to elastic sections, while the function corresponding to the remaining economic sectors shows a continuous decreasing function with minor change in the elasticity structure of the curve. Results show that the impact of extreme measures of water pricing reduces water abstraction by up to 42% vs. the baseline scenario, with an economic reduction in regional Gross Domestic Product (GDP) of 1%.

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 o ers 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, o ering 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.