Analyzing Economic Tradeoffs of Water Use in the Nam Ngum River Basin, Lao PDR

Abstract

This paper develops a hydroeconomic optimization modeling framework to assess the economic consequences and potential trade-offs of various infrastructure development and policy pathways in the Nam Ngum Basin (Lao PDR). We considered whether large shifts in water resource demands in a relatively water abundant basin could induce meaningful economic tradeoffs among water uses, including hydropower generation, irrigation expansion, flood control, and transboundary water transfer objectives. We constructed a series of sensitivity scenarios under dry, average, and wet hydrologic conditions with varying levels dam development, irrigated agricultural expansion, agricultural returns, flood control storage restrictions, and water diversions to northeast Thailand. We also considered how flows into the Mekong would be affected by these collective developments. In general, results indicate that tradeoffs between hydropower production, irrigation, and flood control are modest.

Keywords: Optimization, water resources management, Mekong River, Lao PDR, hydropower, irrigation