Journal of Water Resources Planning and Management

Increasing demand for water coupled with reduced water availability in many regions of the world is leading to growing water scarcity and calls for implementation of a range of technological, institutional, and economic solutions. Water-economy models (WEMs), which integrate the complex interrelationships between hydrologic and economic systems, are effective tools for analyzing these issues and for providing appropriate solutions across varied spatial and temporal scales. These models can be powerful tools for examining potential future changes in water resources systems, including the effects of climate change, socioeconomic changes, and infrastructural and policy responses to water resource management challenges. In this paper, the WEM models used to answer water economy questions are classified into two general categories on the basis of their structure: network-based (simulation or optimization) hydroeconomic models, and economywide (input-output or computable general equilibrium) models. This paper highlights the primary differences in the applications and interpretations obtained using these approaches, analyzes the distribution of questions that different WEMs have been used to answer, and discusses previous work and efforts to integrate across model types. Findings suggest that additional efforts are needed to more realistically account for the range and complexity of linking water systems and society, particularly regarding ecology and water quality, and the food and energy sectors. Additionally, the broader economic impacts of water-related processes, for example those related to interregional trade dynamics, the distribution of income, and migration, should be investigated further. In effect, because of the inherent complexity in the economic dynamics underlying many water systems, such tools can challenge intuition and provide critical insights that are relevant to more effective management of transboundary water resources and related sectors