Role of hydrology and economics in water management policy under increasing uncertainty

• How hydrologists-economists face similar issues when informing public policy.
• Murray-Darling Basin examples illustrate positive and negative issues in resource policy case.
• Knowledge-need assessment, evidence (data), modeling approaches and communication are key.
• More common ground between the two disciplines than not, allowing for working partnerships.

Well-designed public policy stimulates social progress. However, when governments translate political vision into programmes for social change, the complexity of issues can overwhelm the policy-making process, creating disappointment and suboptimal outcomes. In this paper we examine why evidence-based policy-making approaches often fail to provide policy-makers with credible, consistent and clear outcomes matching broad social interest. The need for public policy primarily arises from a lack of perfect knowledge, which causes individuals and agencies to behave in ways that counter social interest. We therefore suggest that effective public policy formulation involves: determining what evidence is available, relevant and useful; as well as identifying critical gaps to making public policy necessary and meaningful. Murray-Darling Basin case examples highlight key stages in effective natural resource policy formulation, and sources of difficulties that need to be managed to maximize scientific contributions. These examples show that effective public policy decisions can still be made and information asymmetry managed via strong evidence, expert analysis to verify that evidence, and an understanding of knowledge gaps such that critical interventions can be agreed upon and objectives achieved in view of how they will be managed and resourced. Finally, we draw attention to the opportunities available and challenges that exist for hydrologists, economists and other social scientists to work together in assisting the policy process, and in particular to minimize the burden of information constraints in making effective water resource policy.