The paper is a comprehensive review of the Spanish National Hydrological Plan, which proposes to transfer water from the lower part of the Ebro River up to the Levante basins, around 912 km away. The National Hydrological Plan is a conventional, static plan, which focuses primarily on supply management. The plan is based on the explicit assumption that the world will change only incrementally during its entire economic life of 100-200 years. The analysis indicates that much of the increased water demands forecasted are unlikely to materialize due to increasing emphasis on demand management practices, major structural changes in the agricultural sector that will occur by 2020 and the requirements of the Water Directive of the European Union, which must be fulfilled by 2010. Even now, the cost per cubic metre of water delivered at the end of the transfer is nearly twice the cost of desalinated water. The National Hydrological Plan in its present form cannot be justified for economic, environmental and social reasons. In addition, the plan will not be necessary if demand management practices are implemented.

The main objective of the National Hydrological Plan of Spain is to transfer water from the Ebro River to basins along the Mediterranean coast. However fundamental studies that should have been carried out before the Plan was approved are still not available. Among these are cost-benefit analyses of the transfer, nature of its beneficiaries, potential users who can afford this high-priced water, and social and environmental impacts of the project. In addition, the proposed transfer of water does not reflect modern thinking on water management, nor does it consider the latest technological alternatives.

The present paper outlines the views of the Government of Aragon on the National Hydrological Plan of Spain. It concludes that the transfer of water from the Ebro River will accentuate the differences among some regions of Spain in terms of their development potentials. It will unquestionably constrain the future development of regions that are already disadvantaged, such as Aragon. Alternatives are proposed where the regions in need of water can obtain it, but without adversely affecting the economic, social and environmental sustainability of the region and the people of Aragon.

This paper analyses the economic aspects of the Ebro water transfer, which have been overlooked in the Spanish National Hydrological Plan. The questions examined are the cost of transferred water, and irrigated agriculture in the Levante and south-eastern regions, which are the main water transfer destinations. Results show that the water transfer is not economically sustainable, because the costs of the diverted water are higher than the current marginal value of water in agriculture, and crop profitability is insufficient to pay for the whole volume of transferred water. A compromise solution between increasing water supply and demand management measures will combine a reasonable water price increase with water desalination in coastal counties. This solution would reduce water demand with a moderate effect on farmers' revenue and net income. Spain could find alternative investment projects to the water transfer, able to improve social welfare.

Article 43 of the Spanish Water Law (revised text, Legislative Decree 1/2001 of 20 July) lays down the obligation for the planning of national water resources to be approved by law. This mandate was fulfilled on 6 July 2001, with the publication of the law of the National Hydrological Plan (Law 10/2001, 5 July, of the National Hydrological Plan, hereinafter referred to as the NHP). The application of this law has important implications from an economic point of view, given its large budget (at least 4.2 billion euros, corresponding to the official budgeted amount), and the economic forces it will unleash if it is completed. It will also have serious repercussions for the Ebro basin and the catchment basins that will receive the diverted waters. The NHP, and all the corresponding studies and documentation, offer numerous interesting perspectives for economic analysis, from methodological and conceptual aspects to empirical considerations. Its analysis from an economic policy viewpoint has fostered numerous contributions (all the official documentation on the NHP is available on the website of the Ministerio de Medio Ambiente (www.mma.es). There may, or may not, be a scarcity of water resources in certain basins, but there are so many sources of documentation, analyses and research studies on the topic that it is literally impossible to revise them in such limited space. A fair summary of this body of literature is that the NHP has been severely judged by most economic analysts. A concise and synthesized sentence would appear to reflect the general agreement that the NHP should not be carried out according to the terms, premises and budgets on which it has been drawn up (the most complete source of information published to date is the volume edited by P. Arrojo in 2001, El Plan Hidrológico Nacional: A Debate (Bilbao, Fundación Nueva Cultura del Agua y Bakeaz), which contains dozens of reports on the NHP). The purpose of this paper is to describe the assumptions used in the economic analysis of the NHP and summarize the extant literature on the subject. It attempts lo review the state of the art of the knowledge concerning the 'NHP economy' and finally formulate some reflections on the future of this NHP and other optional plans.

In many arid countries water project planning has undergone significant changes over the past 20 years. This re-evaluation has been motivated by the shortcoming, of the traditional 'supply' approach to water project development and the differences between the planned project outcomes and the actual results. The response has been for projects whose water was allocated and priced using the traditional methods to restructure their water allocation and pricing to accommodate changing demands for water and evolving environmental preferences. The transfers proposed under the Spanish National Hydrological Plan are compared to water projects in other arid countries.

The main goal of the Spanish National Hydrological Plan is the implementation of an inter-basin water transfer of a maximum of 1050 hm3/year from the lower Ebro River to the north and south Mediterranean coast. The plan also includes an additional list of public works of about 100 new dams and the infrastructure for new irrigation areas, as well as water treatment plants and river canalizations, etc. Taking into account that the planned Ebro transfer would take 50 m3/s during 8 months, and that river flow is mostly in the interval of 150-250 m3/s during this period, the abstraction would represent between one-third and one-fifth of the Ebro flow. This plan, if implemented, would have a strong negative environmental impact on the fluvial ecosystem, as well as on the estuarine and marine ecosystems, but these impacts have not been properly considered in the environmental assessment. This paper principally deals with the environmental effects of the water transfer on the area that supplies the water, downstream from the diversion point. The impact of an inter-basin water transfer on the mouth area is based on three aspects: (1) there is an increase in salinity in the delta and estuary; (2) there is a decrease in the biological productivity, mostly due to the decrease of nutrient inputs, and there are also changes in the species distribution; and (3) the river carries less sediment, which affects the geomorphology of the system. The possible effects of lower water quality and changes in the fluvial system have also to be considered. The sustainability of deltas can only be guaranteed with the allocation of an appropriate flow regime, which must include not only a liquid flow, but also a solid flow (sediment), given that deltas and coastal systems need sediment inputs (and nutrients) from the river to maintain their structure and dynamics. The classical methods of determining environmental flows in rivers are neither designed nor adequate for the objective of maintaining the deltas and estuaries in a good ecological state. The determination and implementation of an environmental flow regime not only for the river but also for the coastal and marine systems represent a new challenge for scientists and managers.

The USA's 20th-century experience with major subsidized water development left a plethora of problems. Another generation now struggles with how lo correct them. Today there is consensus among experts that water policy should be the result of broad public participation and should consider the social, economic and environmental effects of water use and development. Yet, formal institutions in the USA have been slow to incorporate innovations reflecting this consensus. The European Community's (EC's) Water Framework Directive and Spanish water law, however, appear to embody a progressive approach to water policy. Criticisms of Spain's proposed Ebro River transfers cast doubt on whether they would conform to Spanish or EC policy. The paper concludes that before the Ebro proposal proceeds it should be judged rigorously, according to policies expressed in Spanish law and the Directive.