The future management of water resources must take into account the levels of beneficial use that apply to various water use sectors. Competition for water during periods of low natural availability (droughts) suggests that users may not have access to their full supply requirement all of the time. This is particularly true of regions such as South Africa where natural water availability is highly variable and possibly will be even more so in the future. Socioeconomic evaluations of water allocation strategies should therefore account for the impacts of periodic restrictions (or shortfalls) in supply across different water use sectors. This paper presents an approach to designing water allocation operating rules that can account for restrictions and their impacts on individual water users, as well as on the community as a whole. The approach is illustrated using hypothetical data, as real data are not generally available. The paper maintains that it is important for socioeconomic evaluation methods to account for the possible effects of supply restrictions as well as the relative benefits of the normal supply volume. If they do not, they will not provide the information required by water resource engineers to design and operate water allocation systems.

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