Climate change, water supply limits, and continued population growth have intensified the search for measures to conserve water in irrigated agriculture, the world's largest water user. Policy measures that encourage adoption of water-conserving irrigation technologies are widely believed to make more water available for cities and the environment. However, little integrated analysis has been conducted to test this hypothesis. This article presents results of an integrated basin-scale analysis linking biophysical, hydrologic, agronomic, economic, policy, and institutional dimensions of the Upper Rio Grande Basin of North America. It analyzes a series of water conservation policies for their effect on water used in irrigation and on water conserved. In contrast to widely-held beliefs, our results show that water conservation subsidies are unlikely to reduce water use under conditions that occur in many river basins. Adoption of more efficient irrigation technologies reduces valuable return flows and limits aquifer recharge. Policies aimed at reducing water applications can actually increase water depletions. Achieving real water savings requires designing institutional, technical, and accounting measures that accurately track and economically reward reduced water depletions. Conservation programs that target reduced water diversions or applications provide no guarantee of saving water.

This paper presents an integrated hydrologic-economic modeling framework for optimizing conjunctive use of surface and groundwater at the river basin scale. Integrated river basin modeling with distributed groundwater simulation and dynamic stream-aquifer interaction allows a more realistic representation of conjunctive use and the associated economic results. The use of an economic objective function, maximizing the net economic value of water use, provides solutions that optimize economic efficiency in water resources management. Constraints guarantee the feasibility and sustainability of suggested operations. A nonlinear optimization model is presented for the Adra River Basin system (Spain). Model results suggest a variety of water management and operation strategies and indicate where significant the economic benefits can be obtained through capacity expansion. A procedure allowing a systematic assessment of the economic indicators required by the European Water Framework Directive (WFD) is provided....