[1] The International Conference on Water and the Environment held in Dublin in 1992 emphasized the need to consider water as an economic good. Since water markets are usually absent or ineffective, the value of water cannot be directly derived from market activities but must rather be assessed through shadow prices. Economists have developed various valuation techniques to determine the economic value of water, especially to handle allocation issues involving environmental water uses. Most of the nonmarket valuation studies reported in the literature focus on long-run policy problems, such as permanent (re)allocations of water, and assume that the water availability is given. When dealing with short-run allocation problems, water managers are facing complex spatial and temporal trade-offs and must therefore be able to track site and time changes in water values across different hydrologic conditions, especially in arid and semiarid areas where the availability of water is a limiting and stochastic factor. This paper presents a stochastic programming approach for assessing the statistical distribution of marginal water values in multipurpose multireservoir systems where hydropower generation and irrigation crop production are the main economic activities depending on water. In the absence of a water market, the Lagrange multipliers correspond to shadow prices, and the marginal water values are the Lagrange multipliers associated with the mass balance equations of the reservoirs. The methodology is illustrated with a cascade of hydroelectric-irrigation reservoirs in the Euphrates river basin in Turkey and Syria.

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Abstract. The upper Blue Nile River Basin in Ethiopia is a largely untapped resource despite its huge potential for hydropower generation and irrigated agriculture. Controversies exist as to whether the numerous infrastructural development projects that are on the drawing board in Ethiopia will generate positive or negative externalities downstream in Sudan and Egypt. This study attempts at (1) examining the (re-)operation of infrastructures, in particular the proposed reservoirs in Ethiopia and the High Aswan Dam and (2) assessing the economic benefits and costs associated with the storage infrastructures in Ethiopia and their spatial and temporal distribution. To achieve this, a basin-wide integrated hydro-economic model has been developed. The model integrates essential hydrologic, economic and institutional components of the river basin in order to explore both the hydrologic and economic consequences of various policy options and planned infrastructural projects. Unlike most of the deterministic economic-hydrologic models reported in the literature, a stochastic programming formulation has been adopted in order to: (i) understand the effect of the hydrologic uncertainty on management decisions, (ii) determine allocation policies that naturally hedge against the hydrological risk, and (iii) assess the relevant risk indicators. The study reveals that the development of four mega dams in the upper part of the Blue Nile Basin would change the drawdown refill cycle of the High Aswan Dam. Should the operation of the reservoirs be coordinated, they would enable an average annual saving of at least 2.5 billion m 3 through reduced evaporation losses from the Lake Nasser. Moreover, the new reservoirs (Karadobi, Beko-Abo, Mandaya and BorCorrespondence to: A. Tilmant (amaury.tilmant@me.com) der) in Ethiopia would have significant positive impacts on hydropower generation and irrigation in Ethiopia and Sudan: at the basin scale, the annual energy generation is boosted by 38.5 TWh amongst which 14.2 TWh due to storage. Moreover, the regulation capacity of the above mentioned reservoirs would enable an increase of the Sudanese irrigated area by 5.5%.