Modelling water policies with sustainability constraints: a dynamic accounting analysis

The EU Directive 2000/60/EC, also known as the “Framework directive in the field of water policy”, stresses the importance of water in human development processes and states that EU members should coordinate water policies towards a sustainable use of this resource; hence, water has a strategic role both for present and future generations and should be managed using a systemic approach. Sustainable policies for the management of water resources must also foresee the setting up of complex systems for analysis and evaluation which must be able to control and govern the entire water system, taking into account both sustainability and the economic impacts of the policies adopted. In our paper, we propose a model which, on one hand, describes the physical relationships among different economic activities and the natural water cycle, while allowing us, on the other hand, to evaluate the economic impact of water policy sustainability. For doing this, we integrate a material flow account approach with a national accounting scheme (NAMEA). This new framework allows the analyst to consider both the effect of given policies on the water cycle and the constraint produced by the sustainability problem on the economic system.