Comparing the Economic and Environmental Effects of Different Water Management Schemes Using a Coupled Agent–Hydrologic Model

Confronted with diverse water management schemes, policymakers in arid basins face difficulty in choosing a particular scheme due to a lack of appropriate tools to estimate possible physical and economic outcomes in a comprehensive manner. This study develops a coupled agent-hydrologic model to both capture and provide insights into the dynamics and patterns of real-world water management using the midstream area of the Heihe River Basin in northern China as a case study. Water consumption patterns, economic efficiency, and environmental externalities of three different management schemes, namely an administered scheme (AS), a surface-water market scheme (SWMS), and a surface-water-groundwater market scheme (SGWMS) are evaluated. The results show that an agent's (irrigation district) behaviors under market schemes are determined by the difference between equilibrium price and pumping cost, related to water table depth. The annual total benefits are improved under market schemes, especially in dry years. Negative environmental effects of the market schemes do occur but are not significant. The travel time of groundwater corresponds to a delay longer than 2 months in upper agents' pumping influence on drawdown. In general, the proposed model application in this study addresses complex real-world management issues by presenting physically interpretable and verifiable outcomes, and therefore aids policymakers in decision making by providing a broader view of water management.