Hydro Economic Modeling to Support Water Resources Management and Irrigated Bio Fuel Crops Production

The worldwide increasing demand for renewable energy sources will reflect on bio fuels' production. Increase in production of bio fuels will have important consequences to the environment, especially water resources, such as increased water demands, waste production, pollution and other externalities. To mitigate these impacts, the production of irrigated bio fuel crops must be adequately planned, considering the watershed's hydrology and water availability, existing infrastructure and competing water demands, including economic ones. This paper discusses a framework to investigate water management and operational decisions being raised as the demand for biofuels increases, and presents a modeling framework designed to study the effects of irrigated agricultural production, including bio fuel crops, in the water's economic value. The model uses a network based, economically driven optimization approach with surface reservoir operation. The objective function minimizes the water's scarcity cost to users, subject to physical and legal constraints in the system. The information produced should be useful to (a) support the water allocation among economic demands, especially the ones related to bio fuel crops production, (b) support the development and adaptation of water planning and management in watersheds where the production of bio fuels is expected to increase, (c) understand the impact of bio fuel production in the water's availability and economic value and (d) evaluate economic costs of meeting environmental demands in a scenario with high water consumption for bio fuel production.