Development of an optimization-driven equilibrium model for managing water consumption and their socio-economic effects

In this study, an optimization-driven general water-management equilibrium model (OWCGE) is developed to facilitate collaborative governance of economy and water resources. The OWCGE will first regulate the strategic direction of water allocation through the development of a non-deterministic fractional optimization model, and then explore the responses of various sectors to different water policies through the computable general equilibrium (CGE) model. The main contribution of OWCGE is simultaneously addressing water allocation under the trade-offs between environmental protection and socio-economic development and tackling the impact of disturbances from one part of the economy on another. A case study of a highly urbanized province (i.e., Guangdong) in China is provided as an example for demonstrating the proposed approach. According to the results, the agricultural sector group should receive 46.9 % of total water supply, followed by the industrial sector group with 20.3 %. The results of scenario analysis indicate that when the water demand of the tertiary sector group increases by 10 %, the total GDP would fall at the fastest rate. The increase in domestic water demand (20 %) would result in economy losses in most sectors, and the degrees of such reductions are less than -1.1 %.