Environmental flows in hydro-economic models

The protection of environmental flows, as a management objective for a regulating agency, needs to be consistent with the aquifer water balance and the degree of resource renewability. A stylized hydro-economic model is used where natural recharge, which sustains environmental flows, is considered both in the aquifer water budget and in the welfare function as ecosystem damage. Groundwater recharge and the associated natural drainage may be neglected for aquifers containing fossil water, where the groundwater is mined. However, when dealing with an aquifer that constitutes a renewable resource, for which recharge is not negligible, natural drainage should explicitly appear in the water budget. In doing so, the optimum path of net extraction rate does not necessarily converge to the recharge rate, but depends on the costs associated with ecosystem damages. The optimal paths and equilibrium values for the water volume and water extraction are analytically derived, and numerical simulations based on the Western La Mancha aquifer (southwest Spain) illustrate the theoretical results of the study.