Abstract
In this paper, an innovative method—that combines a technical and socio-economic analysis—is presented to assess the implications of policy decisions on water productivity. In the technical part, the variability in crop water productivity (CWP) is analyzed on the basis of actual water consumption and associated biomass production using the Surface Energy Balance Algorithm for Land (SEBAL). This generates input for the socio-economic analysis, which aims to quantify the foregone economic water productivity (EWP) of policy decisions to allocate water in a social optimal way. The basis for arguments to transfer water between categories of users will be strengthened and be more objective when the productivity in existing and alternative uses is known. The usefulness of such an approach is shown in the South African part of the Inkomati Basin, where according to the Water Act, water has to be reserved for basic human needs and to protect aquatic ecosystems. The opportunity costs, in terms of foregone EWP, of decisions to divert water away from agriculture are assessed. The results show that diverting water away from crops with a low CWP is not always the most cost-effective way in terms of foregone EWP.