Water economics, or the need to put science into context

Important work of the Economic and institutional analysis research group at IMDEA Agua

Scientific and technological advances in water resources and services management, and environmental health, are evident when scientific contributions are published: for example, findings on new pollutants in wastewater discharges, their levels and effects at the local level; or registered patents with new developments that allow to improve current processes such as wastewater treatment or desalination. However, it is not always so obvious that the effort must also be made to put these advances into context. Using the previous examples: which economic activities do these pollutants come from (i.e. agriculture, different industries, services)? or what are the problem dimensions in terms of consumption and environmental and socio-economic impacts, at different scales, local, national or worldwide? This is also important to evaluate and suggest new responses at the institutional level, through the design and implementation of public policies.

The objective of acquired water policy commitments (binding ones in the form of Directives and laws, such as the Water Framework Directive) is not (only) to comply, but to go beyond influencing all the sectors to which water management transcends (energy, public health, agriculture, biodiversity…), to approach the (complex) idea of guaranteeing medium and long-term water security. This is possible, for example, by providing solutions through the analysis of incentives and behaviours within socio-ecological systems at different levels; assessing risks, costs, benefits with a broad view, but also good practices where they exist.

Therefore, the activity of the Economic and institutional analysis research group at IMDEA Agua deals with issues that range from the analysis of the economic regulation of urban water cycle services to that of the economic dimensions of integrated water resources management, all this with the envelope of discussions on governance (understood as the management of complexity) and assessing climate change as an enveloping challenge towards the achievement of water security aim.

Therefore, we participate in research projects at the European level, within consortia that coordinate organisations from numerous Member States (AQUACROSS under the Horizon 2020 programme, and EPI-Water under the FP7 programme), about aquatic ecosystems management and the evaluation of economic instruments for sustainable water management, respectively. But we are working also in services contracts under the context of framework contracts with the European Commission or the European Parliament, where the application of the latest scientific findings for the improvement of public policies is even more evident and immediate.

The latest contracts we are working on with both agencies include: advice on European regulatory and policy issues in the field of climate change; the analysis of economic data on the implementation of the Water Framework Directive and the Floods Directive and on the financing of measures to achieve their objectives; the economic analysis of environmental policies in the context of better regulation; and the evaluation, review and development of EU water policy.

In addition, we are currently participating in contracts with the World Bank Group that will update the economic analysis necessary to continue with the hydrological planning cycles in Bulgaria, which add up to those already executed with hydro-economic analyses for decision-making on water resources management in Mongolia, Bangladesh, Peru and Chile.

Together, we provide experience in projects and contracts for a decade at IMDEA that make this line of research a solid, advanced and benchmark support in terms of framework assessment of the economic dimensions of water policy in particular, and of all public policies, due to the transversal nature of water, in general.

Published On: March 16, 2020

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