Modelling Hydrological, Economic and Governance Aspects of Water Allocation in the Lake Naivasha Basin Kenya

Abstract

Freshwater scarcity poses a significant challenge in many parts of the world, particularly in arid and semiarid areas prone to volatile rainfall and water supply. The growing population and climate change exacerbate this scarcity. Governing agencies or states responsible for water management may respond using some water allocation rules. However, in a water-scarce national or transboundary river basin characterized by a multiplicity of interactions, the effectiveness of rule-based water allocation heavily relies on adequate institutions and system knowledge to coordinate water use. Most river basins, especially in developing countries, are characterized by weak institutions, market failure, and poor understanding of the hydrological system. This results in non-cooperative water use whereby multiple, institutionally independent, physically interconnected users base their water use decisions on individual rationality ignoring spatial externalities. <br /> Conventional river basin models for evaluating alternative water allocation policies have mostly emulated purposefully designed water use systems where centralized governance and rule-based cooperation of agents are assumed. This is a strong and often unrealistic assumption in the face of non-cooperative water use. Although alternative modelling tools are emerging, there is a limited understanding of how these tools work and few empirical applications. This thesis aims to contribute to filling this gap using the Lake Naivasha Basin (LNB) in Kenya as a case study. Each of the three main chapters of the thesis addresses vital issues for realistically modeling effective alternative water allocation policies. <br /> Lack of reliable streamflow data, thus water availability, volatile rainfall, and highly variable lake levels, hinder proper predictions and effective water allocation policies in the LNB. In Chapter two, we use relatively reliable lake-level data and an inverted water balance model to reconstruct streamflow and estimate water availability. By doing so, we contribute methodologically to the literature on predicting streamflow in ungauged basins. <br /> Chapter three presents a systematic review of emerging tools for modelling non-cooperative water use in river basins. The new tools make progress in depicting individual decision making and general strategic interactions but often lack a sufficient representation of the relevant hydrological and economic connections between the water users. Although individual water users’ decisions in non-cooperative water use are modelled using a decentralized modelling approach, most studies still assume a coordinating agency or functioning market mechanism. Finally, in chapter four, we simulate the potential hydrological and economic impacts of water rights trade in the LNB. In contrast to previous studies, we define a reference situation of unregulated water use that more accurately depicts the basin’s actual water governance against which we evaluate alter-native scenarios. We applied an individual optimization technique for this purpose. The key findings reveal some patterns with relevant policy implications for water allocation. We show that unregulated water use provides the highest economic gain, but that comes at the expense of a significant drop in lake level, which is an unstainable and undesirable outcome. In water scarce situation, buyers may be forced to purchase more water rights than they intend to use to ensure water flow.