IWRM (Bogardi and Nachtnebel 1994; Kindler  2000) is a systematic approach to planning and management that considers a range of supply-side and demand-side processes and actions, and incorporates stakeholder participation in decision processes.  It also facilitates adaptive management by continually monitoring and reviewing water resource situations.  To plan effectively, utilities must engage their customers and external regulators when assessing the potential impacts of climatic change on their water systems. IWRM is a useful tool that utility managers can apply in their efforts to plan for adaptation to climate change.

To articulate the supply- and demand-side processes and actions, IWRM must simultaneously address the two distinct systems that shape the water management landscape.  Factors related to the biophysical system, namely climate, topography, land cover, surface water hydrology, groundwater hydrology, soils, water quality, and ecosystems, shape the availability of water and its movement through a watershed. Factors related to the socio-economic management system, driven largely by human demand for water, shape how available water is stored, allocated and delivered within or across watershed boundaries. Increasingly, operational objectives of the installed hydraulic infrastructure constructed as part of the management system seek to balance water for human use and water for environmental needs. In Europe, for example, the EU Water Framework Directive obligates water utilities to cooperate in river basin management efforts to achieve good ecological and water- quality status for rivers and lakes.  Thus, integrated analysis of the natural and managed systems is arguably the most useful approach to evaluate management alternatives.

This type of analysis relies upon the use of hydrologic modeling tools that simulate physical processes including precipitation; evapotranspiration, runoff, infiltration, etc. (see Figure 1a, Pre-Development). In managed systems, analysts must also account for the operation of hydraulic structures such as dams and diversions (see Figure 1b, Post-Development), as well as institutional factors that govern the allocation of water between competing demands, including consumptive demand for agricultural or urban water supply or non-consumptive demands for hydropower generation or ecosystem protection. Changes in each of these elements can influence the ultimate impacts of climate change on a water utility and its customers.

Figure 1. Characterization of (a) pre- and (b) post-watershed development that highlights the implications of water resource infrastructure on the hydrologic cycle.

There are several approaches to using climate change information from AOGCMs to evaluate the response of the terrestrial hydrologic cycle at scales relevant to water utilities, each differing in the detail used to represent various physical processes. Although different hydrologic models can yield different values in terms of streamflow, groundwater recharge, water quality results, etc (Boorman and Sefton 1997; Beven 2001), their differences have historically been small in comparison to the uncertainties attributed to climate change reflected in the differences among AOGCM output.  However, the chain of effects from climate, to hydrologic response, to water resource systems, to the actual impacts on water supply, power generation, navigation, water quality, etc. will depend on many factors, each with a different level of uncertainty.

Deciding how to evaluate system reliability or specific vulnerabilities given future uncertainty is a major challenge for water resource managers. Note that both the top-down or bottom-up approaches ultimately require climate and socio-economic projections for assessing particular vulnerabilities (bottom-up) or overall performance (top-down).  While current water resource planning methods already consider projected changes in water demand and variations in water supply, they often rely upon limited historical datasets.  Historically, many water utilities made their infrastructure investments and long-term management strategies assuming that precipitation and runoff would follow past trends.  Mounting evidence for climate change makes this an increasingly tenuous assumption.