Economics of sustainable watershed management under alternative climate change scenarios

Date of Completion

January 2009


Climate Change|Economics, Environmental|Environmental Management|Sustainability




Numerous dams have been built across the globe. However, sedimentation and pollutants from upstream have caused some dams to provide reduced economic benefits. Furthermore, the downstream externalities generated by a dam itself, though critical, have not received adequate attention. It is also important to note that watersheds can be impacted directly by either regional or global climate changes. Policy makers need to adapt sediment management and water pollution control measures to changing climatic conditions. ^ This dissertation provides a dynamic optimization framework to investigate management strategies for maximizing social net benefits of an entire watershed under various climate change scenarios. First, the relationship between the upstream watershed and its downstream reservoir is analyzed for multipurpose dams. An application to the Aswan High Dam in Egypt and the Sudan shows that, under current climate conditions, combined upstream watershed management in the Sudanese agriculture region and sediment management at the dam can help to increase net social benefits by as much as $112.51 billion. Second, the model considers the downstream watershed where most of Egyptian agriculture is located. Reservoir operations cause negative downstream externalities costs to be as much as $47.42 billion. In this case, optimal integrated watershed management, which includes policies for control of upstream soil erosion, reservoir-level sedimentation, and downstream agriculture and water pollution, can help to increase net social benefits by $269.94 billion. ^ Finally, the integrated watershed model is extended to investigate the overall impacts of climate change on the watershed. As climate conditions worsen, the importance of the dam's storage capacity and maintaining the quality of the entire watershed is increased. For example, under a pessimistic climate change scenario, - optimal integrated watershed management can increase social net benefits by $719.16 billion. ^