Development of Regional Economic Supply Curves for Surface Water Resources and Climate Change Assessments: A Case Study of China

Wiberg, D. & Strzepek, K.M. (2005). Development of Regional Economic Supply Curves for Surface Water Resources and Climate Change Assessments: A Case Study of China. IIASA Research Report. IIASA, Laxenburg, Austria: RR-05-001

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Abstract

Recently, a number of reports on global renewable water resources have been produced. These studies generally report the average annual renewable water resources for large regions or countries based on runoff from rivers and streams. These average resource data are compared with estimated current and future water demand to determine which regions and countries could be facing serious water scarcity problems. Microeconomic analysis, however, suggests that increasing the supply leads to higher costs and could thereby reduce demand. Furthermore, the total renewable water resources are not 100% usable. The global studies to date have not systematically considered the costs of developing and supplying water, the potential water loses due to development, or the relationship between supply and demand. This report aims to improve the analysis of global and regional water resources by developing a methodology to study climate change impacts on the supply of water from storage in large watershed regions of China.

There are four major steps in developing the supply curves from regional reservoir storage. In step one, the Climate- and Human Activities-sensitive Runoff Model (CHARM), a spatially explicit hydrologic model that is sensitive to land-use and climate changes, is developed to use climate databases to produce time series runoff calibrated to the annual averages. In step two, a methodology is developed to calculate evaporation from regional reservoir storage, incorporating hundreds or thousands of reservoirs for areas where little reservoir information is available. In the third step, the storage- yield curve is calculated based on the CHARM results and the evaporation calculated from the area-volume curves developed in step two. Finally, reservoir storage cost curves are developed based on watershed physiography and reservoir size. These cost curves are then combined with the storage-yield curve to produce a curve representing regional water supply from storage.

This regional water supply curve methodology is applied to examine the impacts of climate change on the water supply from storage in nine major watershed regions in China. The general circulation model scenarios used produce results suggesting that China will benefit from increased runoff in regions of water scarcity and high demand. However, the increased evaporation and flow variability will take its toll in some regions, increasing the frequency of floods and droughts and thereby the cost of and need for storage in those regions.

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