Insights from Hydro-Economic Modeling for Climate Resilience in the Nazas–Aguanaval Watershed in Mexico

Agriculture uses 80% of global water resources, driving several water management challenges across the world. These challenges require the exchange of effective practices. We found that California’s Tulare Lake Basin (TLB) and Mexico’s Nazas–Aguanaval watershed share key features, leading us to propose the TLB as a model of climate resilience. After contrasting the policies for TLB with those for Nazas–Aguanaval, we found that no constrained pricing policy proposal exists for the Nazas–Aguanaval watershed. We apply a hydro-economic model using Positive Mathematical Programming to support an incentive structure for reducing water use in agriculture while maximizing profits. The optimal crop policy could reduce water demand by 20%, with a trade-off of an 11% reduction in profits. This would save 185.4 hm3/year, which represents 90% of the volume required for an ongoing infrastructure project for urban water supply in the watershed. Additionally, implementing a price of 14 USD/dam3 could increase the irrigation district’s revenue, boosting farmers’ profits by up to 16% and district revenue by up to 134%. Our results demonstrate the benefits of applying Positive Mathematical Programming in a semiarid watershed to support water and agriculture policy. This research is a starting point for increasing the climate resilience of watersheds under water and financial stress.