1. “Assessing Costs and Benefits of Adaptation: Methods and Data” First Regional Training Workshop – Capacity Building Programme on the Economics of Adaptation Bangkok, Thailand 11 Mar - 14 Mar 2013 Brian H. Hurd, PhD, Professor Dept. of Agricultural Economics & Agricultural Business New Mexico State University bhurd @ nmsu.edu http://agecon.nmsu.edu/bhurd

2. Lec 2.Hydro-Economic Models in Practice: Two Case Studies of Model Design, Data and Implementation Case #1: Colorado River Case #2: Rio Grande

3. Methods and Conceptual Approach

5. Model Basics Develop a schematic diagram of the watershed system Describes physical structure (tributaries, inflows, and reservoirs Identifies and locates watershed services Show diversion points and instream uses Derive estimates for the model’s objective function Develop demand and supply curves for each service based on water diversion or instream flow Describe model constraints Mass balance (upstream to downstream flow) Intertemporal storage in reservoirs Institutional flow restrictions

6. Colorado River Model (Upper Basin)

7. Colorado River Model (Lower Basin)

8. Outcomes: Colorado River Watershed Projected hydrologic and runoff changes Estimated changes in runoff and allocation in the Lower Colorado watershed Economic impacts across the watershed

9. How Climate Change Could Alter Colorado Watershed Runoff: the driving data

10. Modeled Runoff and Allocation Changes in the Lower Colorado Basin

11. Colorado Basin Sectoral Impacts

12. Basin Results: Agriculture

13. Basin Results: Hydropower

14. Basin Results: Total Welfare

15. Objectives: (1) Estimate the impacts of climate change on agricultural diversity of the Upper Rio Grande basin and (2) Estimate the system’s adaptability to climatic changes through a hydro-economic framework.

16. Source: Enrigue Vivoni, AZ State Univ. Spatial Heterogeneity: Climate, Vegetation, Environment

17. Rio Grande Hydro- Economic Model Schematic Diagram

18. Rio Grande – Hydrology Model Validation

19. Agricultural Irrigation Benefits Consumptive irrigation requirements rise with increased temperatures Agricultural water demands are increased

20. Urban Water Benefits Urban water demands are most directly affected by population changes Income increases are assumed to have little direct effect on water demand because increased demand for water services is offset by increased water-use efficiency

21. Reservoir Recreation Benefits

22. Climate Scenarios Selected General Circulation Models (GCMs): HadCM3 from Hadley Center for Climate Prediction and Research in UK Met Office CSIRO MK3.0 from Common Wealth Scientific and Industrial Research Organization of Australia GFDL0 from National Oceanic and Atmospheric Administration’s (NOAA) Geophysical Fluid Dynamics Laboratory All under A1B emissions storyline

23. Population Growth Scenarios Population growth increases water demand Isolate climate change

24. Hydrologic Modeling Status and Results Distribution of Annual Streamflow

25. Streamflow Changes Streamflows were produced using WATBAL hydrologic model Conceptual rainfall-runoff model that works with the changes of temperature and precipitation and easy to use model to assess climate change impacts on river basins (Yates, 1996).

26. Climate Change and Crop Irrigation Productivity Shifted production function to the right due to higher Consumptive Irrigation Requirement (CIR)

27. Results Changes in water allocation:

28. Crop Mix For San Luis Valley

29. Crop Mix For MRGCD

30. Crop Mix for EBID and EPAG

31. Crop Water Consumption Level

34. Economic Impacts

35. Marginal Value of Water

36. Conclusions Agriculture can lose big share of its water consumption losing almost a third under 2080 GFDL0 (driest scenario). At the same time the economic impacts of climate change on the whole economy can sum up to $175 million (12.6% of the total net benefits). Recreational sector loses 67% (highest percentage-wise) and agricultural sector loses $160 million (highest dollar-wise) under 2080 GFDL0. In 2030’s small grain hay and corn silage are loser crops losing more than 60% and 50% of their production under 2030 GFDL0, while pecans are the winners. In 2080’s potato joins the group of loser crops losing 50% of their total production while crops like pecans, green chile and onions are the winner crops losing less than 15% of their production.

37. Merci’ Beaucoup! Grazie Thank You Gracias Brian H. Hurd, PhD Department of Agricultural Economics & Agricultural Business Gerald Thomas Hall Rm. 350 New Mexico State University Tel : (575) 646-2674 Email: bhurd@nmsu.edu Web: http://agecon.nmsu.edu/bhurd