The Economics of Water Resource Allocation: Valuation Methods and Policy Implications

  • Ben Groom
  • Phoebe Koundouri
Part of the Global Issues in Water Policy book series (GLOB, volume 1)


In this chapter a ‘watershed economics approach’ that could be applied in Cyprus is proposed which is composed of two important stages. In Stage I economic valuation techniques are used to establish the economic value of the competing demands for surface and groundwater, incorporating where necessary an analysis of water quality. The valuation exercise allows the objective balancing of demands based upon the equi-marginal principle to achieve economic efficiency. In Stage II a policy impact analysis is proposed which addresses issues of social equity and the value of water for environmental/ecological purposes. The analysis is undertaken within the confines of the watershed; the most natural unit for the analysis of water allocation and scarcity since it determines the hydrological links between competing users and thus the impacts of one user upon another. The methodology is encapsulated by a case study of the Kouris watershed in Cyprus.


Watershed economics approach Economic valuation techniques Balancing demands Social equity Kouris watershed 


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Copyright information

© Springer Science+Business Media B.V. 2011

Authors and Affiliations

  1. 1.School of Oriental and African StudiesUniversity of LondonLondonUnited Kingdom
  2. 2.Department of International and European Economic StudiesAthens University of Economics and BusinessAthensGreece

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