Ethical aspects in the economic modeling of water policy options

Abstract

Model-based ecological-economic studies on water management can be a valuable source of  information for policy decisions on water-related issues; however, disputable normative assumptions  may be involved. Deliberately or unintentionally, such assumptions can make these studies policyprescriptive.  Using the conceptual design of a spatially explicit agro-economic model as an example,  this article introduces and employs a framework for analyzing normative assumptions in applied  economic studies to increase transparency. We argue that the many value-laden issues identified in the  studies cannot be - and should not be - avoided. Instead, if used properly and transparently, they can  increase the policy-relevance and usability of model-based studies without being policy-prescriptive or  “subjective.” This requires analyzing and comparing the practical consequences of alternative policy  goals or other value-laden assumptions. Therefore, this article secondly demonstrates, through an  example, how researchers can deal more constructively with normative assumptions; our model  calculations indicate different consequences of alternative ethical assumptions on how water-intensive  agricultural products could be globally distributed. Finally, we argue that applied economic studies can  improve their coverage of the ethical aspects of water policy, including (1) social equity, (2) intergenerational  justice and (3) ecological sustainability.