Effects of hydrological variability on the sustainable use of water in a regional economy. An application to Tuscany

Existing input-output (IO) models have mainly focused on water demand. Some studies have incorporated water supply (availability), but do not take into account its natural variability, an essential element when performing a water stress analysis. The present study integrates the hydrological variability of water availability into a hydroeconomic IO model, considering its exogenous effects on water supply and its exogenous effects on water demand. Two endogenous effects are considered: i) changes in blue water requirements in the agricultural industry due to variations in precipitation and evapotranspiration, and ii) changes in grey water requirements in all discharging industries due to variations in runoff and groundwater recharge. By means of a T-years hydrological series and Monte Carlo simulations, the model allows estimating T values of the Extended Water Exploitation Index (EWEI), obtaining its empirical probability distribution and confronting it with scarcity thresholds. Additionally, the model includes a methodology to incorporate intra-annual variation, obtaining the critical month EWEI and defining a more transparent and endogenous scarcity threshold. Empirically tested for the Italian region of Tuscany considering a multivariate hydrological model for the generation of a 100-year hydrological series, our results allow a more in-depth analysis of water scarcity in the region.