Modelling Social, Economic and Institutional Developments

1. www.dafne-project.eu
@dafne_project
DECISION ANALYTIC FRAMEWORK TO EXPLORE THE
WATER-ENERGY-FOOD NEXUS IN COMPLEX TRANSBOUNDARY
WATER RESOURCES OF FAST DEVELOPING COUNTRIES.
Funded under the H2020 Framework
Programme of the EU, GA No. 690268
WP4 Report and
Highlights
Professor Phoebe Koundouri
Research Coordinator
(AUEB, LSE)
Dr. Ebun Akinsete
Senior Researcher, ICRE8
Lecturer Nikolaos Englezos,
Senior Researcher, ICRE8 , UniPi
Dr. Xanthi I. Kartala,
Senior Researcher, ICRE8, AUEB

2. Work Package 4
(Report)
Modelling Social, Economic
and Institutional Developments

3. Modelling Social, Economic and Institutional Developments
3
Work Package 4 (M1-30)
Partners
Leader: ICRE8
ETH Zurich
POLIMI
UABDN
UO
IWMI
ACCESS
UNZA
UEM

4. Modelling Social, Economic and Institutional Developments
4
Work Package 4 (M1-30)
Aim: The modelling of economic and social processes
and environmental policy under the WEF nexus
perspective
• These models will be relevant to the cases/locations
under investigation,
• accommodating the sharing of a natural resource in
a transboundary setting
• capturing the effects of current and future Foreign
Direct Investments (FDIs) directed at the areas of
study (land exploitation, etc.).

5. Modelling Social, Economic and Institutional Developments
5
Work Package 4 (M1-30)
• WP4 will also investigate:
• issues of governance in order to identify means of
cooperation among the stakeholders.
• the assessment of the interface between socio-
demographic characteristics and environmental
legislation, and the WEF NEXUS.
• All models will be able to accommodate all possible
scenarios produced by WP2.
• The results will be combined with the outcome of WP3,
in order to feed the DAF that is developed and used in
WP5.

6. 6
Economic Valuation of Water based on Ecosystem Services
Provided
Work to Date
Task 4.1 – Models of Development of the Economy
(M1-M16)
Leader: ICRE8. Partners: ACCESS, UNZA, UEM

7. 7
Work to Date
Task 4.1 – Models of Development of the Economy
(M1-M16)
Leader: ICRE8. Partners: ACCESS, UNZA, UEM
Focus on Core Water-Dependent Economic Sectors:
• Agriculture (including aquaculture)
• Mining (Industry)
• Energy Production
• Tourism
• Residential Water Supply
Related to the following ecosystem services:
• Provisioning Services: Water, Food
• Regulating Services: Flood prevention, Erosion control
• Supporting (Habitat ) Services: Biodiversity
• Cultural (Recreational) Services: Tourism

8. 8
STEP 1: Estimate sector specific production functions:
GDP (sector i) = F (Technological Capital Input; Labor Input; Natural Capital
Input)
Where i = 1,2 …5
1 = Agriculture (including aquaculture)
2 = Mining (Industry)
3 = Energy Production
4 = Tourism
5 = Residential Water Supply
- Data on technological capital, labor and natural capital will be collected from national and
regional accounts
- Data on Natural Capital will use Environmental Indices as approximations of both quality and
quantity
- Data should be time series (over time) but also yearly panels of regional data points would be
valuable so that we can do panel data econometrics that are more robust.
Work to Date
Task 4.1 – Models of Development of the Economy
(M1-M16)
Leader: ICRE8. Partners: ACCESS, UNZA, UEM

9. 9
STEP 2
• Produce a mathematical model that indicates
 optimal (environmentally sustainable –using boundary conditions from
hydrological models);
 economically efficient (use of water is at the point of equality between the total
economic cost of water and total benefit derived by the sector that uses the
resource),
 socially equitable (inter and intra generational justice and affotability);
allocation of the water over time among these different sectors.
• Simulate the mathematical model, using the estimated production
functions, under climate change and socioeconomic scenarios developed
in WP2.
• Upgrade the mathematical model, where there are two super authorities -
each one having these different sectors - and are competing in a trans
boundary manner to allocate water over their sectors. Simulate again.
• Derive Policy recommendations and identify socio-economic and other
instruments for implementation of Sustainable Management in the River
Basin.
Work to Date
Task 4.1 – Models of Development of the Economy
(M1-M16)
Leader: ICRE8. Partners: ACCESS, UNZA, UEM

10. 10
✓ September 2017
Work to Date
Task 4.2 – Models and Principles of Water
Governance (M6-M18)
Leader: UABDN. Participants: UO, POLIMI, ACCESS, UNZA, UEM

11. 11
Deliverable 4.4.
due Sept 2018
Future Target
Task 4.2 – Models and Principles of Water
Governance (M6-M18)
Leader: UABDN. Participants: UO, POLIMI, ACCESS, UNZA, UEM

12. 12
Motivating Questions:
• There are environmental challenges in the Omo and Zambezi basins
• How well do current policy frameworks respond to them? Or enable effective
responses to them?
• How can policies be improved to better respond to them?
Process
• Collecting, compiling and classifying relevant legal and policy documents from
basins and their riparian countries.
• Identifying the degree to which laws and policies of riparian countries are matched
to environmental issues and align across countries.
• Expect to generate recommendations on how responses to environmental issues
might be improved.
Work to Date
Task 4.3 – Models of Environmental Policy (M8-M20)
Leader: IWMI. Partners: EM-ETHZ, ICRE8

13. 13
Analysis:
• Analyzing how well existing/current policies match with and respond to
environmental issues
• Depth and nature of reference to identified environmental issues within
environmental policies in each basin
• Degree to which approaches are harmonized
• Degree to which non-environmental policies in each basin contain
provision for safeguarding priority environmental issues
Work to Date
Task 4.3 – Models of Environmental Policy (M8-M20)
Leader: IWMI. Partners: EM-ETHZ, ICRE8

14. Work to Date
14
Task 4.4 – Models of Demographic, Cultural and
Social Developments (M10-M22)
Leader: UO. Partners: UNZA, EMU, ACCESS, ICRE8
• Causal models developed in individual stakeholder interviews will
be merged into a comprehensive model comprising central social
issues related to the WEF Nexus
• Main challenges:
• Finding a suitable problem variable
• Integration with other models
• Basin wide vs hotspots
• Progress for the Zambezi basin
1. Identification of problem variables based on data available from the
DAFNE workshop in Lusaka
2. Stakeholder interviews for individual models completed
3. Merging into one comprehensive model
4. Validation and completion of model (presented as poster) during
the NSL

15. 15
Deliverables
Work Package 4
Month Activity (Deliverables) Lead
Partne
r
Mo. 16 D. 4.1 : Models of the economic development in the ]Zambezi river
basins
ICRE8
Mo. 20 D4.2 –Models of environmental policy in the Omo and Zambezi
river basins
IWMI
Mo. 22 D4.3 –Models of demographic, cultural and social
developments in the Omo and Zambezi river basins
UOS
Mo. 24 D4.4 – Models and principles of water governance in the Omo
and Zambezi river basins
UABDN
Mo. 30 D4.5 – Integrated framework of models for social, economic
and institutional developments
ICRE8
Mo. 24 D. 4.6 : Models of the economic development in the Omo river
basins
ICRE8

16. 16
Milestones
Work Package 4
Month Activity (Deliverables) Lead
Partner
Mo. 16 MS28 – Economic development model of two economies
based on a common restricted resource
ICRE8
Mo. 20 MS29 – Environmental policy alternatives formulated EM-
ETHZ
Mo. 22 MS30 – Social learning model in a transboundary setting, with
a common natural resource
IWMI
Mo. 25 MS31 – Map of interconnected relationships between the
models of economic development, environmental processes,
water governance, and social and demographic developments
under the W-E-F nexus
perspective.
ICRE8

17. 17
Issues for Discussion
Work Package 4
• Milestones 29 and 30:
IWMI Listed as lead partner for MS30, which appears to be
more in line with UO focus. MS29 is more in line with IWMI work.
• No PMs for New Ethiopian partner WLRC?
• KU Leuven listed as partner under T4.3 but no PMs in WP4?

18. Work Package 4
(Highlights)
Modelling Social, Economic
and Institutional Developments

19. 19
D4.1 - Models of the economic development in the
]Zambezi river basins (M16 - ICRE8)
Relevant Publications
Book chapter on groundwater management .
Koundouri, P. , Akinsete, E., Englezos, N., Kartala, X.I., Souliotis, I. & Adler,
J. (Forthcoming 2017) “Economic Instruments, Behavior and Incentives in
Groundwater Management”. In: Villholth, K., Conti, K., López-Gunn, E.,
Garrido, A. & van der Gun, J. (eds) Advances in Groundwater Governance.
Leiden: Balkema Editions
Review Paper
Koundouri, P., Palma, C. R., and Englezos, N. (Forthcoming 2017) ‘Out of
sight, not out of mind: developments in economic models of groundwater
management’, International Review of Environmental and Resource
Economics

20. 20
D4.2 – Models and principles of water governance in
the Omo and Zambezi river basins (M20 – UABDN)
An Analytical Overview of the Legal Framework for
Governance of the Zambezi and Omo River Basins: a
Water-Energy-Food Nexus Perspective

21. 21
D4.3 – Models of environmental policy in the Omo
and Zambezi river basins (M22 - IWMI)
Most extensive known collection of water, energy,
agriculture, environment laws and policies on the
Omo and Zambezi basins

22. Causal Model For Zambezi River Basin
22
D4.4 – Models of demographic, cultural and social
developments in the Omo and Zambezi river basins
(M24 - UO)

23. 23
D4.5 – Integrated framework of models for social,
economic and institutional developments (M30 –
ICRE8)
Sustainable Development Framework for WP4
Integration

24. www.dafne-project.eu
@dafne_project