Ethical aspects in the economic modeling of water policy options

• Applied economic studies inevitably contain normative assumptions.
• A new framework increases transparency and avoids concealed policy-prescription.
• We apply the framework to a concrete agro-economic model and water management study.
• We show how to use normative assumptions in a constructive and policy-relevant way.
• A modeling exercise on testing normative assumption explores their possible consequences.

Model-based ecological-economic studies on water management can be a valuable source of information for policy decisions on water-related issues; however, disputable normative assumptions may be involved. Deliberately or unintentionally, such assumptions can make these studies policy-prescriptive. Using the conceptual design of a spatially explicit agro-economic model as an example, this article introduces and employs a framework for analyzing normative assumptions in applied economic studies to increase transparency. We argue that the many value-laden issues identified in the studies cannot be – and should not be – avoided. Instead, if used properly and transparently, they can increase the policy-relevance and usability of model-based studies without being policy-prescriptive or “subjective”. This requires analyzing and comparing the practical consequences of alternative policy goals or other value-laden assumptions. Therefore, this article secondly demonstrates, through an example, how researchers can deal more constructively with normative assumptions; our model calculations indicate different consequences of alternative ethical assumptions on how water-intensive agricultural products could be globally distributed. Finally, we argue that applied economic studies can improve their coverage of the ethical aspects of water policy, including (1) social equity, (2) inter-generational justice and (3) ecological sustainability.