Water option contracts for reducing water supply risks: an application to the Tagus-Segura Transfer

El agua es un recurso cada vez más escaso y valioso. Por ello, los recursos hídricos disponibles deben asignarse de una forma eficiente entre los diferentes usos. El cambio climático aumentará la frecuencia y severidad de los eventos extremos, y podría incrementar la demanda de agua de los cultivos. El empleo de mecanismos flexibles de asignación de agua puede ser imprescindible para hacer frente a este aumento en la variabilidad del balance hídrico y para asegurar que los riesgos de suministro, y no solo los recursos, son compartidos de manera eficiente entre los usuarios. Los mercados de agua permiten la reasignación de los recursos hídricos, favoreciendo su transferencia desde los usos de menor a los de mayor valor. Diferentes tipos de mercados de agua se han establecido en diferentes partes del mundo, ayudando a los participantes a afrontar los problemas de escasez de agua en esas zonas. En España, los intercambios de agua están permitidos desde 1999, aunque la participación de los usuarios en el mercado ha sido limitada. Hay varios aspectos de los mercados de agua en España que deben mejorarse. Esta tesis, además de proponer una serie de cambios en el marco regulatorio, propone la introducción de contratos de opción de agua como una posible mejora. La principal ventaja de este tipo de contratos es la estabilidad legal e institucional que éstos proporcionan tanto a compradores como vendedores. Para apoyar esta propuesta, se han llevado a cabo diferentes análisis que muestran el potencial de los contratos de opción como herramienta de reducción del riesgo asociado a una oferta de agua inestable. La Cuenca del Segura (Sureste de España), la Cuenca del Tajo y el Acueducto Tajo- Segura han sido seleccionados como casos de estudio. Tres análisis distintos aplicados a dicha región se presentan en esta tesis: a) una evaluación de los contratos de opción como mecanismo para reducir los riesgos de disponibilidad de agua sufridos por los regantes en la Cuenca del Segura; b) un marco teórico para analizar las preferencias de los regantes por diferentes mecanismos de gestión del riesgo de disponibilidad de agua, su disposición a pagar por ellos y los precios aproximados de estos instrumentos (seguro de sequía y contratos de opción de agua); y c) una evaluación del papel de los contratos de opción en las decisiones de aprovisionamiento de agua de una comunidad de regantes ante una oferta de agua incierta. Los resultados muestran el potencial de reducción del riesgo de los contratos de opción para regantes en España, pero pueden ser extrapolados a otros sectores o regiones. Las principales conclusiones de esta tesis son: a) la agricultura será uno de los sectores más afectados por el cambio climático. Si los precios del agua aumentan, la rentabilidad de los cultivos puede caer hasta niveles negativos, lo que podría dar lugar al abandono de cultivos de regadío en algunas zonas de España. Las políticas de cambio climático y de agua deben estar estrechamente coordinadas para asegurar un uso de agua eficiente y la rentabilidad de la agricultura; b) aunque los mercados de agua han ayudado a algunos usuarios a afrontar problemas de disponibilidad del recurso en momentos de escasez, hay varios aspectos que deben mejorarse; c) es necesario desarrollar mercados de agua más flexibles y estables para garantizar una asignación eficiente de los recursos entre los usuarios de agua; d) los resultados muestran los beneficios derivados del establecimiento de un contrato de opción entre usuarios de agua del Tajo y del Segura para reducir el riesgo de disponibilidad de agua en la cuenca receptora; e) la disposición a pagar de los regantes por un contrato de opción de agua o un seguro de sequía hidrológica, que representa el valor que tienen estos mecanismos para aquellos usuarios de agua que se enfrentan a riesgos relacionados con la disponibilidad del recurso, es consistente con los resultados obtenidos en estudios previos y superior al precio de mercado de estos instrumentos, lo que favorece la viabilidad de estos mecanismos de gestión del riesgo ; y f) los contratos de opción podrían ayudar a optimizar las decisiones de aprovisionamiento de agua bajo incertidumbre, proporcionando más estabilidad y flexibilidad que los mercados temporales de agua. ABSTRACT Water is becoming increasingly scarce and valuable. Thus, existing water resources need to be efficiently allocated among users. Climate change is expected to increase the frequency and severity of extreme events, and it may also increase irrigated crops' water demand. The implementation of flexible allocation mechanisms could be essential to cope with this increased variability of the water balance and ensure that supply risks, and not only water resources, are also efficiently shared and managed. Water markets allow for the reallocation of water resources from low to high value uses. Different water trading mechanisms have been created in different parts of the world and have helped users to alleviate water scarcity problems in those areas. In Spain, water trading is allowed since 1999, although market activity has been limited. There are several issues in the Spanish water market that should be improved. This thesis, besides proposing several changes in the legislative framework, proposes the introduction of water option contracts as a potential improvement. The main advantage for both buyer and seller derived from an option contract is the institutional and legal stability it provides. To support this proposal, different analyses have been carried out that show the potential of option contracts as a risk reduction tool to manage water supply instability. The Segura Basin (Southeast Spain), the Tagus Basin and the Tagus-Segura inter-basin Transfer have been selected as the case study. Three different analyses applied to this region are presented in this thesis: a) an evaluation of option contracts as a mechanisms to reduce water supply availability risks in the Segura Basin; b) a theoretical framework for analyzing farmer’s preferences for different water supply risk management tools and farmers’ willingness to pay for them, together with the assessment of the prices of these mechanisms (drought insurance and water option contracts); and c) an evaluation of the role of option contracts in water procurement decisions under uncertainty. Results show the risk-reduction potential of option contracts for the agricultural sector in Spain, but these results can be extrapolated to other sectors or regions. The main conclusions of the thesis are: a) agriculture would be one of the most affected sectors by climate change. With higher water tariffs, crop’s profitability can drop to negative levels, which may result in the abandoning of the crop in many areas. Climate change and water policies must be closely coordinated to ensure efficient water use and crops’ profitability; b) although Spanish water markets have alleviated water availability problems for some users during water scarcity periods, there are several issues that should be improved; c) more flexible and stable water market mechanisms are needed to allocate water resources and water supply risks among competing users; d) results show the benefits derived from the establishment of an inter-basin option contract between water users in the Tagus and the Segura basins for reducing water supply availability risks in the recipient area; e) irrigators’ willingness to pay for option contracts or drought insurance, that represent the value that this kind of trading mechanisms has for water users facing water supply reliability problems, are consistent with results obtained in previous works and higher than the prices of this risk management tools, which shows the feasibility of these mechanisms; and f) option contracts would help to optimize water procurement decisions under uncertainty, providing more flexibility and stability than the spot market.

Option contracts for allocating water in inter-basin transfers: the case of the Tagus-Segura Basin in Spain

Users in the Mediterranean region face significant water supply risks. Water markets mechanisms can provide flexibility to water systems run in tight situations. The largest water infrastructure in the Iberian Peninsula connects the Segura and Tagus Basins. Stakeholders and politicians in the Tagus Basin have asked that water transfers between the two basins be eventually phased out. The need to increase the statutory minimum environmental flow in the middle Tagus and to meet new urban demands is going to result in a redefinition of the Transfer?s management rules, leading to a reduction in the transferable volumes. To minimise the consequences of such restrictions to irrigators in the Segura Basin who depend on the transferred volumes, we propose the establishment of water option contracts between both basins that represents an institutional innovation with respect to previous inter-basin spot market experiences. Based on the draft of the new Tagus Basin Plan, we propose both a modification of the Transfer?s management rule and an innovative inter-basin option contract. The main goal of the paper is to define this contract and evaluate it with respect to non-market scenarios. We also assess the resulting impact on environmental flows in the Tagus River and water availability for users in the Segura Basin, together with the economic impacts of such contract on both basins. Our results show that the proposed option contract would reduce the impact of a change in the transfer?s management rule, and reduce the supply risks of the recipient area.

Analysis of foraminifera from the Tagus Estuary, Portugal

The distribution and microhabitat of living benthic fora- minifera (15 calcareous and 6 agglutinated) have been studied in two box cores from the Tagus Prodelta. Stable oxygen and carbon isotopes were analysed for eight different species from six surface samples from the Tagus Prodelta and Estuary. At the two box core stations, most of the living foraminifera were restricted to the oxygenated top cm of the sediment and generally show a shallow infaunal behavior. Those taxa are e.g. Rectuvigerina phlegeri, Stainforthia fusiformis and species of the genus Bolivina, which is the most abundant genus in the Tagus Prodelta. Infaunal species are found down to 10 cm depth, and some infaunal taxa, e.g. Bulimina marginata, Globobulimina auriculata and Nonionella turgida, inhabit the low oxic or anoxic sediments. The deep infaunal species are suggested to feed selectively, on refractory organic matter or on the bacterial stocks, while the opportunistic shallow infaunal species are believed to feed on fresh phytodetritus or labile organic matter. Our data show that there is a close connection between the concentration of foraminifera and the distribution of organic matter in the area. The highest abundance of living benthic foraminifera was found in sediments close to the Tagus river plume, where the sediments have relatively high organic carbon contents. The spatial distribution of the stable isotope values of different benthic foraminifera reflects the distribution of the low salinity and relatively high temperature water with high organic carbon fluxes within the Tagus Estuary.

Biogeochemical response of Tagus Estuary to climate change : a modelling study

Estuaries are highly dynamic systems which may be modified in a climate change context. These changes can affect the biogeochemical cycles. Among the major impacts of climate change, the increasing rainfall events and sea level rise can be considered. This study aims to research the impact of those events in biogeochemical dynamics in the Tagus Estuary, which is the largest and most important estuary along the Portuguese coast. In this context a 2D biophysical model (MOHID) was implemented, validated and explored, through comparison with in-situ data. In order to study the impact of extreme rainfall events, which can be characterized by an high increase in freshwater inflow, three scenarios were set by changing the inputs from the main tributaries, Tagus and Sorraia Rivers. A realistic scenario considering one day of Tagus and Sorraia River extreme discharge, a scenario considering one day of single extreme discharge of the Tagus River and finally one considering the extreme runoff just from Sorraia River. For the mean sea level rise, two scenarios were also established. The first with the actual mean sea level value and the second considering an increase of 0.42 m. For the extreme rainfall events simulations, the results suggest that the biogeochemical characteristics of the Tagus Estuary are mainly influenced by Tagus River discharge. For sea level rise scenario, the results suggest a dilution in nutrient concentrations and an increase in Chl-a in specific areas.For both scenarios, the suggested increase in Chl-a concentration for specific estuarine areas, under the tested scenarios, can lead to events that promote an abnormal growth of phytoplankton (blooms) causing the water quality to drop and the estuary to face severe quality issues risking all the activities that depend on it.

Between the Atlantic and the Mediterranean : the late bronze age around the Tagus estuary (Portugal) : economic, social and cultural aspects

This paper deals with the importance, quantity and diversity of Late Bronze Age sites known around the Tagus estuary. The material culture points out to the existence of cultural stimuli from very different origins: from the Iberian Peninsula inner, the North Atlantic and the Mediterranean basin, related to the social organization and the economy of the populations that inhabited this region between the XIII century BC and the IX century BC, according to the available radiocarbon data. These populations interacted with the first Phoenicians that arrived to the region at the end of this period, after episodic relations of trading with their antecedents, from Central Mediterranean region.

NEW DATA ON THE CHRONOLOGY OF THE VALE DO FORNO SEDIMENTARY SEQUENCE (LOWER TAGUS RIVER TERRACE STAIRCASE) AND ITS RELEVANCE AS FLUVIAL ARCHIVE OF THE MIDDLE PLEISTOCENE IN WESTERN IBERIA

NEW DATA ON THE CHRONOLOGY OF THE VALE DO FORNO SEDIMENTARY SEQUENCE (LOWER TAGUS RIVER TERRACE STAIRCASE) AND ITS RELEVANCE AS FLUVIAL ARCHIVE OF THE MIDDLE PLEISTOCENE IN WESTERN IBERIA Pedro P. Cunha 1, António A. Martins 2, Jan-Pieter Buylaert 3,4, Andrew S. Murray 4, Luis Raposo 5, Paolo Mozzi 6, Martin Stokes 7 1 MARE - Marine and Environmental Sciences Centre, Department of Earth Sciences, University of Coimbra, Portugal: pcunha@dct.uc.pt 2 MARE - Marine and Environmental Sciences Centre, Dep. Geociências, University of Évora, Portugal; aam@uevora.pt 3 Centre for Nuclear Technologies, Technical University of Denmark, Risø Campus, Denmark; jabu@dtu.dk 4 Nordic Laboratory for Luminescence Dating, Aarhus University, Risø DTU, Denmark; anmu@dtu.dk 5 Museu Nacional de Arqueologia, Lisboa, Portugal; 3raposos@sapo.pt 6 Department of Geosciences, University of Padova, Italy; paolo.mozzi@unipd.it 7 School of Geography, Earth and Environmental Sciences, University of Plymouth, UK; m.stokes@plymouth.ac.uk The stratigraphic units that record the evolution of the Tagus River in Portugal (study area between Vila Velha de Ródão and Porto Alto villages; Fig. 1) have different sedimentary characteristics and lithic industries (Cunha et al., 2012): - a culminant sedimentary unit (the ancestral Tagus, before the drainage network entrenchment) – SLD13 (+142 to 262 m above river bed – a.r.b.; with probable age ca. 3,6 to 1,8 Ma), without artefacts; - T1 terrace (+84 to 180 m; ca. 1000? to 900 ka), without artefacts; - T2 terrace (+57 to 150 m; top deposits with a probable age ca. 600 ka), without artefacts; - T3 terrace (+43 to 113 m; ca. 460 to 360? ka), without artefacts; - T4 terrace (+26 to 55 m; ca. 335 a 155 ka), Lower Paleolithic (Acheulian) at basal and middle levels but early Middle Paleolithic at top levels; - T5 terrace (+5 to 34 m; 135 to 73 ka), Middle Paleolithic (Mousterian; Levallois technique); - T6 terrace (+3 to 14 m; 62 to 32 ka), late Middle Paleolithic (late Mousterian); - Carregueira Sands (aeolian sands) and colluvium (+3 a ca. 100 m; 32 to 12 ka), Upper Paleolithic to Epipaleolithic; - alluvial plain (+0 to 8 m; ca. 12 ka to present), Mesolithic and more recent industries. The differences in elevation (a.r.b.) of the several terrace staircases results from differential uplift due to active faults. Longitudinal correlation with the terrace levels indicates that a graded profile ca. 200 km long was achieved during terrace formation periods and a strong control by sea base level was determinant for terrace formation. The Neogene sedimentary units constituted the main source of sediments for the fluvial terraces (Fig. 2). Geomorphological mapping, coupled with lithostratigraphy, sedimentology and luminescence dating (quartz-OSL and K-feldspar post-IRIR290) were used in this study focused on the T4 terrace, which comprises a Lower Gravels (LG) unit and an Upper Sand (US) unit. The thick, coarse and dominantly massive gravels of the LG unit indicate deposition by a coarse bed-load braided river, with strong sediment supply, high gradient and fluvial competence, during conditions of rapidly rising sea level. Luminescence dating only provided minimum ages but it is probable that the LG unit corresponds to the earlier part of the MIS9 (ca. 335 to 325 ka), immediately postdating the incision promoted by the very low sea level (reaching ca. -140 m) during MIS10 (362 to 337 ka), a period of relatively cold climate conditions with weak vegetation cover on slopes and low sea level. Fig. 1. Main Portuguese reaches in which the Tagus River can be divided (Lower Tagus Basin): I – from the Spanish border to Arneiro (a general E–W trend, mainly consisting of polygonal segments); II – from Arneiro to Gavião (NE–SW); III – from Gavião to Arripiado (E–W); IV – from Arripiado to Vila Franca de Xira (NNE-SSW); V – from Vila Franca de Xira to the Atlantic shoreline. The faults considered to be the limit of the referred fluvial sectors are: F1 – Ponsul-Arneiro fault (WSW-ENE); F2 – Gavião fault (NW-SE); F3 – Ortiga fault (NW-SE); F4 – Vila Nova da Barquinha fault (W-E); F5 – Arripiado-Chamusca fault (NNE-SSW). 1 – estuary; 2 – terraces; 3 – faults; 4 – Tagus main channel. The main Iberian drainage basins are also represented (inset). The lower and middle parts of the US unit, comprising an alternation of clayish silts with paleosols and minor sands to the east (flood-plain deposits) and sand deposits to the west (channel belt), have a probable age of ca. 325 to 200 ka. This points to formation during MIS9 to MIS7, under conditions of high to medium sea levels and warm to mild conditions. The upper part of the US unit, dominated by sand facies and with OSL ages of ca. 200 to 154 ka, correlates with the early part of the MIS6. During this period, progradation resulted from climate deterioration and relative depletion of vegetation that promoted enhanced sediment production in the catchment, coupled with initiation of sea-level lowering that increased the longitudinal slope. The Vale do Forno and Vale da Atela archaeological sites (Alpiarça, central Portugal) document the earliest human occupation in the Lower Tagus River, well established in geomorphological and environmental terms, within the Middle Pleistocene. The Lower Palaeolithic sites were found on the T4 terrace (+26 m, a.r.b.). The oldest artefacts previously found in the LG unit, display crude bifacial forms that can be attributed to the Acheulian, with a probable age of ca. 335 to 325 ka. The T4 US unit has archaeological sites stratigraphically documenting successive phases of an evolved Acheulian, that probably date ca. 325 to 300 ka. Notably, these Lower Palaeolithic artisans were able to produce tools with different sophistication levels, simply by applying different strategies: more elaborated reduction sequences in case of bifaces and simple reduction sequences to obtain cleavers. Fig. 2. . Simplified geologic map of the Lower Tagus Cenozoic basin, adapted from the Carta Geológica de Portugal, 1/500000, 1992). The study area (comprising the Vale do Forno and Vale de Atela sites) is located on the more upstream sector of the Lower Tagus River reach IV, between Arripiado and Chamusca villages. 1 – alluvium (Holocene); 2 – terraces (Pleistocene); 3 – sands, silts and gravels (Paleogene to Pliocene); 4 – Sintra Massif (Cretaceous); 5 – limestones, marls, silts and sandstones (Mesozoic); 6 – quartzites (Ordovician); 7 – basement (Proterozoic to Palaeozoic); 8 – main fault. The main Portuguese reaches of the Tagus River are identified (I to V). The VF3 site (Milharós), containing a Final Acheulian industry, with fine and elaborated bifaces) found in a stratigraphic level located between the T4 terrace deposits and a colluvium associated with Late Pleistocene aeolian sands (32 to 12 ka), has an age younger than ca. 154 ka but much older than 32 ka. In the study area, the sedimentary units of the T4 terrace seem to record the river response to sea-level changes and climatically-driven fluctuations in sediment supply. REFERENCES Cunha P. P., Almeida N. A. C., Aubry T., Martins A. A., Murray A. S., Buylaert J.-P., Sohbati R., Raposo L., Rocha L., 2012, Records of human occupation from Pleistocene river terrace and aeolian sediments in the Arneiro depression (Lower Tejo River, central eastern Portugal). Geomorphology, vol. 165-166, pp. 78-90.

Inversion of ambient seismic noise HVSR to evaluate velocity and structural models of the Lower Tagus Basin, Portugal

During its history, several significant earthquakes have shaken the Lower Tagus Valley (Portugal). These earthquakes were destructive; some strong earthquakes were produced by large ruptures in offshore structures located southwest of the Portuguese coastline, and other moderate earthquakes were produced by local faults. In recent years, several studies have successfully obtained strong-ground motion syntheses for the Lower Tagus Valley using the finite difference method. To confirm the velocity model of this sedimentary basin obtained from geophysical and geological data, we analysed the ambient seismic noise measurements by applying the horizontal to vertical spectral ratio (HVSR) method. This study reveals the dependence of the frequency and amplitude of the low-frequency (HVSR) peaks (0.2–2 Hz) on the sediment thickness. We have obtained the depth of the Cenozoic basement along a profile transversal to the basin by the inversion of these ratios, imposing constraints from seismic reflection, boreholes, seismic sounding and gravimetric and magnetic potentials. This technique enables us to improve the existing three-dimensional model of the Lower Tagus Valley structure. The improved model will be decisive for the improvement of strong motion predictions in the earthquake hazard analysis of this highly populated basin. The methodology discussed can be applied to any other sedimentary basin.

Benthic nematodes biodiversity patterns along the gradient of the Tagus estuary (Western Coast of Portugal): Link with abundances distribution pattern of the nonindigenous bivalve Ruditapes philippinarum

The non-indigenous bivalve Ruditapes philippinarum is native to the western Pacific Ocean and it has been one of the most widely introduced species for aquaculture purposes in Europe. In Portugal its presence is known in several estuaries for more than two decades and its populations have increased greatly along the last years1. Currently it’s one of the dominant benthic species in some areas of the Tagus estuary (264,1±470,8 ind./30s tow). Studies on the impacts of invasive bivalves on meiofaunal communities are scarce and restricted to the harvesting effect. Meiofauna of the Tagus estuary is poorly known and possible impacts of the introduction of R. philippinarum were never assessed.

Spatial distribution patterns of the non-native European catfish, Silurus glanis, from multiple online sources - a case study for the River Tagus (Iberian Peninsula)

Effective management of invasive fishes depends on the availability of updated information about their distribution and spatial dispersion. Forensic analysis was performed using online and published data on the European catfish, Silurus glanis L., a recent invader in the Tagus catchment (Iberian Peninsula). Eighty records were obtained mainly from anglers’ fora and blogs, and more recently from www.youtube.com. Since the first record in 1998, S. glanis expanded its geographic range by 700 km of river network, occurring mainly in reservoirs and in high-order reaches. Human-mediated and natural dispersal events were identified, with the former occurring during the first years of invasion and involving movements of >50 km. Downstream dispersal directionality was predominant. The analysis of online data from anglers was found to provide useful information on the distribution and dispersal patterns of this non-native fish, and is potentially applicable as a preliminary, exploratory assessment tool for other non-native fishes.