A Coupled Hydro-Economic Modelling Framework for Analysis of Scenarios about the Future

Rising human populations have created stress on the natural supply of water resources while corresponding economic activities have contributed to deterioration in water quality. Therefore, it is vital to identify pathways for minimizing water use and contamination while also trying to support economic development in order to achieve sustainability goals. To capture the interactions between hydrologic and economic systems necessary for modelling water use and contamination at a sufficient level of spatial detail, we have designed a framework that couples an economic model with a watershed model using a software called URUNME, which was recently developed to support integrated modelling and scenario analysis. To represent the economic system, the Rectangular Choice-of-Technology (RCOT) model is used because it represents both the physical and monetary aspects of economic activities and, unlike the traditional input-output model or partial and general equilibrium models, it is capable of considering choices among operational technologies in addition to the amount and location of production. RCOT also clearly represents the physical availability of water as well as its corresponding costs and price. Thus, there is a direct interdependence between availability of water and its subsequent quantity and cost for economic activities, which can change the choice selection among specific technologies available to different economic sectors and ultimately affect prices of goods. For the first implementation of this modelling framework, the RCOT model is paired with a hydrological model, Hydrological Simulation Program-Fortran (HSPF), which is calibrated to represent a watershed in northern Virginia. The database for the economic model uses county-level input-output data representative of the region in 2016. Linking the RCOT and HSPF models allows scenarios to be analysed to evaluate how changes in economic activities will cause changes in the water use and contamination in the watershed and vice versa.