Hydro Economic Modeling and Water Scarcity Cost in a Watershed with Irrigated Bio Fuel Crops Production

HYDRO ECONOMIC MODELING AND WATER SCARCITY COST IN A WATERSHED WITH IRRIGATED BIO FUEL CROPS PRODUCTION

MARQUES, Guilherme Fernandes ; TORRES, Marcelo; MEDELLIN-AZUARA, Josue; SOARES, Priscila

Bio fuels production, such as ethanol, fills an important role in meeting a common objective to increase renewable energy use in several countries. Recently, irrigation has demonstrated potential to significantly improve sugar cane productivity in Brazil, contributing to further increase production without expanding the crop area. Water resources are a critical element in planning biofuel production in this context; given potential demands for irrigation, waste assimilation and use of shared infrastructure, like multipurpose reservoirs also used for hydropower generation and urban water supply. To avoid transferring impacts to the producer watersheds (water conflicts, waste production and other externalities) biofuels should planned considering the regional hydrology and water availability, existing infrastructure and competing water demands, including economic ones. Such integrated approach should allow investigation of infrastructure expansion, water transfers and conjunctive use opportunities with groundwater management, for example. This research involves a framework to investigate water management, policy and operational decisions, based on the economic value of the water in the watershed. The framework uses a network based, hydro economic optimization model, with an objective function that minimizes the water’s scarcity cost to users, subject to physical and legal constraints in the system. The information produced should be useful to (a) support the water allocation among economic demands, especially the ones related to bio fuel crops production, (b) support the development and adaptation of water planning and management in watersheds where the production of bio fuels is expected to increase, (c) understand the impact of bio fuel production in the water’s availability and economic value and (d) evaluate economic costs of meeting environmental demands in a scenario with high water consumption for bio fuel production.

Key words: hydro economics, water resources planning and management, bio fuels

Official Contact Author: Guilherme Fernandes Marques, Instituto de Pesquisas Hidráulicas, Universidade Federal do Rio Grande do Sul, IPH/UFRGS (guilherme.marques@ufrgs.br)