Comparing the applicability of hydro-economic modelling approaches for large-scale decision-making in multi-sectoral and multi-regional river basins

A traditional engineering-based approach to hydro-economic modelling is to connect a partial equilibrium economic assessment, e.g., changes in sectoral production, to a detailed water resources system model. Since the 1990s, another approach emerged where water data are incorporated into a macro-economic model, e.g., a computable general equilibrium or input-output model, to estimate both direct and indirect economic impacts. This study builds on these different approaches and compares the outcomes from three models in the transboundary Saskatchewan River Basin in Canada. The economic impacts of drought and socioeconomic development are estimated using an engineering-based model, a macro-economic model, and a model that integrates a water resources model and a macro-economic model. Findings indicate that although the integrated model is more challenging to develop, its results seem most relevant for water allocation, owing to capturing both regional and sectoral economic interdependencies and key features of the water resources system in more detail