Abstract
Significant increases in water diversion for irrigation and other uses have taken place worldwide throughout the twentieth century, often with negative consequences for environmental sustainability. In this paper a framework which can be used to undertake an assessment of this trade‐off problem is presented. The framework aims to achieve a balance between water extractions for irrigation and other uses and environmental demand. It involves, among many factors, an understanding of the hydrological, environmental, economic and social consequences of diverting water. The research component of the framework comprises three key elements: water cycle analysis, economic analysis and social analysis. At the core of the water cycle analysis is the characterisation of the water stocks and flows in the systems and a modelling framework to analyse system responses to water‐sharing policies and trade‐offs between extractive and environmental uses. The economic analysis focuses on the valuation of water allocated to each use including the environment, whilst the social analysis is centred on the relative values used to balance water extractions for society's needs and the environment. This framework is illustrated with examples from the Krishna Basin in India and the Murray– Darling Basin in Australia. Copyright © 2009 John Wiley & Sons, Ltd.