Review of hydro-economic models to address river basin management problems: structure, applications and research gaps

Efficient use of water resources is gaining priority in global development policy debates due to the increasing demand for water from agriculture, industry, energy production and ecosystem services. This study systematically reviews the recent hydro-economic modeling (HEM) literature to characterize the relevance of HEM tools for analyzing problems of water resources planning and management. The review considers both basin-wide (simulation and optimization) and economy-wide (input-output and computable general equilibrium) models. The review is helpful for organizing model features and structure, common themes and scenarios found in HEM applications, typical indicators for reporting results, and geographic coverage. The review closes with a summary of potential new directions that would make these tools even more relevant for improved water management policy analysis.