Economic Instruments in Water Resource Management: A Critical Review of Water Pricing and Hydro-Economic Models

This paper presents a critical review of the effectiveness of water pricing as a water resource management instrument, focusing on the analysis of hydro-economic models and pricing policies. Hydro-economic models play a crucial role in the formulation of water management strategies, enabling the integration of physical, economic, and social variables for the efficient allocation of water resources. Recent studies demonstrate that these quantitative approaches are essential for assessing the impacts of water pricing on sectoral consumption and water sustainability. Additionally, pricing policies, such as those implemented in Europe and China, highlight the potential of economic instruments to reduce water consumption and promote greater efficiency in resource use, although challenges related to demand elasticity and social acceptance persist. The bibliometric methodology adopted allowed for the identification of trends and gaps in literature, reinforcing that water governance and social acceptance are critical factors for the successful implementation of these instruments. It is concluded that integrating economic, environmental, and social approaches is essential for the formulation of effective policies that reconcile water use efficiency with the sustainability of water systems.