Integrated hydro-economic modelling: Approaches, key issues and future research directions

Integrated hydro-economic models aim to capture the complexity of interactions between water and the economy. Three main approaches are distinguished: modular, holistic and computable general equilibrium models. The latter top-down models counterbalance the traditional emphasis on bottom-up water engineering approaches. Key issues and future research directions in integrated hydro-economic modelling are discussed and illustrated through a variety of case study applications worldwide. Although the interaction works both ways, feedback effects of water changes on the economy and changes in the economy on the water system are often missing in practice. The link between water and ecology is another important future research direction.