Recent agroeconomic studies in water‐scarce countries such as Spain, Australia, Saudi Arabia, and Israel have revealed the economic viability of irrigating high‐value crops with desalinated water. However, the worldwide growth of large‐scale desalination capacities is primarily designed to resolve urban‐water scarcity, disregarding the impact of desalination on irrigation‐water salinity. We develop a dynamic hydroeconomic programming model where infrastructure capacities and allocations of water quantities and salinities in a regional water distribution network are endogenous. We show that subsidizing desalination is socially warranted because the associated reduction in irrigation‐water salinity is an external effect of water consumption by all water users. Empirical application to the entire state of Israel indicates that large‐scale desalination of seawater and treated wastewater for irrigation is optimal. This result stems from the large share of irrigation‐intensive salinity‐sensitive high‐value crops, motivated by Israel's policies to support local agriculture. Ignoring salinity results in a 45% reduction in desalinated irrigation water, a 29% reduction in farming profits, a 250% increase in water suppliers' profits, and an average deadweight loss of $1,200 a year per hectare of arable land.

Treatment of wastewater is expected to become a major development issue in the years to come. We investigate the relationship between climate and costs of wastewater treatment with the objective of examining if changes in climate might have an impact on the costs of wastewater treatment. For that purpose, we use a cross-section sample of 163 treatment plants from China to estimate the industry’s cost function. The methodology used comprises an econometric estimation procedure of treatment costs of the wastewater sector, and a simulation of changes in these costs predicted with future climate conditions, policy implementation scenarios, population growth and development trends. Our results find evidence of climate change impact on treatment costs. We also simulate potential impact of future policy and climate scenarios on costs of treatment, and we measure the cost impact of all other cost determinants but climate—as these are indirectly affected by accounting for climate in the estimation procedure. This indirect impact predicts total cost changes of different magnitudes across the range of future scenarios investigated.

The Jordan Valley (JV) is a critical region where the interplay of water, energy, food, and ecosystem (WEFE) dynamics presents both challenges and opportunities for sustainable development and climate change mitigation and adaptation. In such a transboundary river basin with acute nexus problems and a long history of conflicts, it is essential that conscious efforts are made to pluralize the debate and actively encourage stakeholders' empowerment, participation and fair collaboration in strategic planning. An integrated framework for participatory strategic planning in the WEFE nexus is proposed, which has been developed in the context of the JV case study. The nexus approach emphasizes decentralized, but coordinated decision making as the source of solutions, based on a clear understanding of the challenges faced. The engagement process consisted of living lab sessions where Causal Loop diagrams facilitated discussions with stakeholders by visualizing the complexity and interdependence of WEFE sectors and prioritizing the challenges faced. Community capacity assessment appraised the capacities of each community, identifying barriers to addressing their priorities. Finally, the gap analysis bridged the baseline understanding with actionable targets. The results not only highlight the pressing challenges, priorities, and leverage points for each territory but also outline pathways for fostering resilience and adaptation to the region's intertwined crises. The priorities and capacities across the three territories of the JV reveal significant disparities, reflecting the diverse socio-political, environmental, and economic contexts of the region. The methodologies and overall framework may be replicated in other regions with similar climate and challenges around the world.

Israel’s water and vegetative agriculture sectors are interdependent, as the latter constitutes the solution for wastewater disposal. We employ a dynamic mathematical programming model that captures this interdependence for evaluating the economic damage of irrigation water salinity under two strategies of blending water sources with different salinities: field blending, which enables farmers to assign water with a specific salinity to each crop, and regional blending, under which all crops experience similar water salinity. Relative to field blending, the buildup rate of desalination under regional blending is slightly expedited; nevertheless, reallocations of water sources across sectors and crops increase the average irrigation water salinity, and the overall welfare decreases by USD 0.08 per cubic meter of irrigation water—about 20% of the water’s average value of marginal product. Salinity-sensitive crops will face the largest per hectare production reduction if regional blending replaces field blending; however, the combined variations in the prices of irrigation water and agricultural outputs may motivate farmers to move irrigation water to these crops. Under equilibrium conditions in the two sectors, a 1% increase in the average salinity of the irrigation water supplied to a region reduces the value of the marginal product of that water by 2.4% and 1.6% under field and regional blending, respectively.