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This paper applies a stochastic dynamic programming framework, incorporating links to hydrological and biophysical models, to assess the economic costs of environmental flows in an unregulated river system in the Namoi Valley of northern New South Wales, Australia. Structural adjustment decisions are included in the model to account for farmer responses to changes in environmental flows through the introduction of a water sharing plan. The results of the analysis indicate that the proposed level of environmental flows reduces water extractions by around 6 per cent, and imposes an opportunity cost of less than 1 per cent in terms of reduced net income over a 20-year period.

In NSW the Water Management Act (2000) requires water to be specifically allocated for environmental purposes so as to improve river health. Water sharing plans have been developed that establish extractive and environmental shares to river flows. In unregulated river systems this has resulted in changed access rules to river flows for irrigation purposes, raising the prospect of opportunity costs being imposed on irrigators. An important consideration in the development of these plans is an assessment of socio-economic impacts of different water sharing options. This paper presents a bioeconomic modelling framework, based on stochastic dynamic programming linked to hydrological and biophysical models, to assess the farm level impacts of different water sharing plans in a sub-catchment of the Namoi Valley. The framework incorporates temporal farm adjustment decisions in response to changes in water rights and the impact of river flow and climatic variability in assessing the impact of different water sharing plans.

The Namoi river catchment in northern NSW is an important irrigation region. Water resources in this region are increasingly stressed. Both surface and groundwater supplies are overallocated in many areas of the catchment. Management options to reduce allocations in line with available supply and environmental requirements are expected to have long term social, economic and environmental implications. One water resource, off-allocation water, is currently unallocated. This means that no user is currently given a property right to this resource and it is available for re-allocation to alternative users, including the environment. This paper outlines an integrated economic-hydrologic modelling tool which has been developed to estimate regional scale economic and environmental trade-offs associated with alternative water allocation policies. A detailed description of the economic modelling component is provided. In particular the way in which capital investment decisions are treated in the model are described. The sensitivity of the model to assumptions about the cost of investing in additional capital is shown and results for the application of the model to a number of policy scenarios are presented.

The IWRAM Decision Support System was developed to consider economic, environmental, and sociocultural trade-offs involved with resource competition and development in the Mae Chaem catchment in Northern Thailand. IWRAM contains two modelling toolboxes utilising a nodal network structure for catchment analysis: a Biophysical Toolbox, for considering the biophysical (erosion, streamflow, crop) implications of 'painted on' land use scenarios; and, an Integrated Modelling Toolbox, which links models of household decision making with the biophysical toolbox to allow for consideration of socioeconomic and environmental trade-offs of many development and policy scenarios. This paper describes the Integrated Modelling Toolbox within the IWRAM system. Links between household decision models, a socioeconomic impacts model and the biophysical toolbox are described and results for a number of forest encroachment scenarios are demonstrated using key indicators of social, economic and environmental performance. The potential for reapplication of the modelling framework to a large number of catchment situations is also discussed.

With rapid intensification of agricultural catchments in northern Thailand a suite of environmental issues have surfaced. The Integrated Water Resources Assessment and Management (IWRAM) project was instigated in response to these issues. The project developed a Decision Support System for the exploration of biophysical and socio-economic impacts of water resources use option. The IWRAM-DSS is comprised of a 'Biophysical Toolbox' that can be implemented alone or an 'Integrated Toolbox' that links socioeconomic models with the biophysical toolbox to explore economic trade-offs and impacts of various scenarios. The Biophysical Toolbox is comprised of three modules - the CATCHCROP crop model, a hydrologic module based upon the IHACRES rainfall-runoff model, and a Universal Soil Loss Equation (USLE) approach modified to suit conditions in northern Thailand. This working paper describes and implements the Fortran 77 version of the Biophysical Toolkit developed jointly by Dr. Barry Croke and Wendy Merritt. A Java version of the model has been coded by Dr. Claude Dietrich and Nick Ardlie, however this version has not been linked with the economic model as part of the fully integrated IWRAM-DSS.

Increasing pressures on water resources and associated cuts in allocation currently threaten many irrigators in the Namoi River catchment. In particular, cuts to groundwater allocation in many zones are expected to have significant negative social and economic impacts. Changed access to off-allocation water has been seen by many in the catchment as one possibility for mediating the impacts of these cuts. This paper discusses water allocation problems in the Namoi River catchment and the way in which off-allocation water may be utilised under various management strategies. A conceptual framework for an integrated economic and hydrological model for considering these options is developed, and details of the economic module are presented.