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PP 4.2 The Resource Allocation Model (RAM)

PP 4.2 The Resource Allocation Model (RAM). Introduction. One of a suite of tools that has developed by BDP for scenario assessment Hydrological-economic model Driven by underlying hydrology. Rationale. Only tool we have in the MRC that explicitly links water use to economic outcomes

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PP 4.2 The Resource Allocation Model (RAM)

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  1. PP 4.2 The Resource Allocation Model (RAM)

  2. Introduction • One of a suite of tools that has developed by BDP for scenario assessment • Hydrological-economic model • Driven by underlying hydrology

  3. Rationale • Only tool we have in the MRC that explicitly links water use to economic outcomes • Provides a picture of overall value-added by water in all its uses under varying sets of assumptions and at different spatial scales • Provides a way for major water-related issues, technical opportunities and potential trade-offs to be understood and examined in economic terms

  4. Roles • Primarily a tool for use in BDP but has found application in other areas • MRC Strategic Plan • MRC Integrated Basin Flow Management Programme • Decision support to planners (at MRC level) and politicians (at national level) • Components of valuation of environmental and resources in existing MRC programmes are consolidated and applied under BDP

  5. Why do we use economic values? • Provide a means for evaluating alternative development scenarios • Help us assess the nature and significance of water allocation trade-offs in quantitative (i.e. monetary) terms

  6. DEMANDS & IMPACTS MODELLED

  7. Data Sources

  8. Preliminary Results • 3 scenarios have been run using RAM • Baseline • Low • High • High development scenario means…

  9. Comparative total value added by water by LMB country • Present total value added by water in the LMB in major productive activities is about US$1.5bn • In the High Development scenario this increases by < 50% • Value added per capita increases by just under 10% in a move from the Baseline to High Development

  10. Value added by water in different uses in the LMB • Agriculture remains the most important source of value-added by water in absolute terms • The increase in value added by water to hydropower compared to other uses is relatively high, accounting for most of Laos’ gains

  11. Environmental Impacts • Calculated as difference between the baseline and “High Development” Scenario • Only calculated for floodplain area below Kratie • Fisheries impacts estimated on the basis of floodplain losses (HAI) and do not consider pollution, connectivity, etc

  12. Environmental Impacts

  13. Limitations of the resource allocation model • Not all water use benefits can be fully valued • The resource allocation model does not indicate which socio-economic groups gets the benefits or who incurs the costs

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