Hydro-economics is a field of research that analyses water resources from a multi-disciplinary approach (Harou et al., 2009). These models generally include one component that describes the water resources of the catchment being analysed (e.g. the physical behaviour of water), an economic component that describes users’ water demand function (changes of willingness to pay relative to availability) and a coupling methodology.
These models go beyond calculating cash flows for water investments and analyse the economic behaviour of users when facing water shortages or surplus. In other words, water demand curves are defined for each water user (e.g. urban, agriculture, mining, environmental and hydropower), and they are used to retrofit the water resources component. As a result, the model approximates the catchment scale response to droughts and wet periods, including the effects of water markets, restrictions, recycling, water sharing and any cooperative efforts by users to adjust to changing climate conditions.
These models are usually focused on agriculture and urban users, the main water consumers in most catchments, but they have sometimes included environmental, industrial and hydropower users (Bekchanov, Sood, & Jeuland, 2015). Nevertheless, although a relevant user of water in several catchments, the mining industry has been rarely included. This paper is part of an ongoing project that addresses this gap by developing a hydro-economic model in the upper section of the Aconcagua River in Chile. The aim of the paper is to analyse the sensitivity of the outputs of the model to changes in input data, both hydrological and economic, and to develop insight on usefulness of such models for reducing water conflicts in mining regions.
Ossa-Moreno, J, McIntyre, N, Smart, J and Rivera, D, 2018. Sensitivity of a hydro-economic model in a mining region to changes in hydrological and economic inputs, in Proceedings Life-of-Mine 2018, pp 52–55 (The Australasian Institute of Mining and Metallurgy: Melbourne).