Water Economics

SIWI develops and applies economic principles to support water management and policy-making.



The economics of water involves understanding its scarcity and its value; ensuring that the costs and benefits of choices are clear, incentives revealed and that the impacts and trade-offs of the alternatives are laid out. Through applied research, advisory services and capacity building, SIWI’s water economists assist partners and clients to:

  •  Understand the relationship between water and economic development and growth
  • Internalise the value of water in decision making
  • Recognise the different incentives, values and trade-offs arising from different allocations of water
  • Identify the benefits of improved management through analysis of how changes in water use and services will improve human welfare
  • Assess how costs and benefits of management options impact on particular groups in society and how an improved distribution can achieved
  • Leverage areas where innovations in water use efficiency and productivity can enable the production of goods and services with less water
  • Pinpoint cost effective actions through cost and impact analysis of different management actions
  • Connect actors and strengthen platforms across the fields of water and economics

Our services

SIWI’ water economists specialise in three core areas: hydro-economic modeling; climate change adaptation; and institutions of water.

Hydro-economic modeling for basin management planning
Hydroeconomic modelling is used to represent hydrologic, engineering, environmental and economic aspects of water resources at varying scales (local, regional and transboundary). SIWI performs modelling that enables decision makers and water actors to analyse risk, opportunities, strategies and policies.

Vulnerability and options analyses for climate change adaptation
Adaptation to climate change requires short- to long-term investments in water resources systems. SIWI performs analyses to assess socio-economic vulnerability and show where and how adaptation investments can most effectively enhance the resilience of the system.

Institutions of water
Water is governed, allocated and used through institutional frameworks. Institutional frameworks alter incentives and the behavior of users. SIWI analyses institutional frameworks (markets, property rights, regulation, policies and norms) to understand incentives, constraints, trade-offs and opportunities that relate to water distribution, use, services and investments. This includes identifying opportunities for innovations and new markets.