A growing number of countries are reforming their water allocation regimes through the use of economic instruments. This article analyzes the performance of economic instruments in water allocation reforms compared against their original design objectives in five European countries: England, France, Italy, Spain and the Netherlands. We identify the strengths of, barriers to and unintended consequences of economic instruments in the varying socio-economic, legal, institutional and biophysical context in each case study area, and use this evidence to draw out underlying common guidelines and recommendations. These lessons will help improve the effectiveness of future reforms while supporting more efficient water resources allocation.

A zombie idea is one that has been repeatedly refuted by analysis and evidence, and should have died, but clings to life for reasons that are difficult to understand without further investigation. The perception that investments in modern irrigation systems automatically save water constitutes a zombie idea. On face value, most would accept that modernizing irrigation systems makes sense: agriculture represents 70% of global water withdrawals while physical irrigation efficiencies range between 25% and 50% worldwide—that is, most of the water entering the irrigation system never makes it to the targeted crop. However, the impacts of modern irrigation systems are complex, and as we show, usually have the opposite effect to that intended through altered cropping and water application decisions by farmers, that aggravate water scarcity. This paper investigates how this zombie idea forms; why it persists, even when proven wrong by scientific evidence; and how to overcome it.

Water resources management is a nontrivial process requiring a holistic understanding of the factors driving the dynamics of human‐water systems. Policy‐induced or autonomous behavioral changes in human systems may affect water and land management, which may affect water systems and feedback to human systems, further impacting water and land management. Currently, hydro‐economic models lack the ability to describe such dynamics either because they do not account for the multifactor/multioutput nature of these systems and/or are not designed to operate at a river basin scale. This paper presents a flexible and replicable methodological framework for integrating a microeconomic multifactor/multioutput Positive Multi‐Attribute Utility Programming (PMAUP) model with an eco‐hydrologic model, the Soil and Water Assessment Tool (SWAT). The connection between the models occurs in a sequential modular approach through a common spatial unit, the “hydrologic‐economic representative units” (HERUs), derived from the boundaries of decision‐making entities and hydrologic responsive units. The resulting SWAT‐PMAUP model aims to provide the means for exploring the dynamics between the behavior of socio‐economic agents and their connection with the water system through water and land management. The integrated model is illustrated by simulating the impacts of irrigation restriction policies on the Río Mundo subbasin in south‐eastern Spain. The results suggest that agents' adaptation strategies in response to the irrigation restrictions have broad economic impacts and subsequent consequences on surface and groundwater hydrology. We suggest that the integrated modeling framework can be a valuable tool to support decision‐making in water resources management across a wide range of scales.