interactions among sectors and factors of production are evident, the linkages among micro and macro policy interventions are far more important and allow policy makers to better assess the outcome of their interventions.

While policy interventions at the regional (micro) levels could lead to desirable results, local considerations may also lead to a sub-optimal outcome from a social point of view. This point is demonstrated in recent findings from works on economy-wide considerations and linkages, where, for example, it was found that reforms outside agriculture have major impacts on rural household income, and that water reforms that are designed without taking into account reforms outside the major consumer of available water—irrigated agriculture—may lower overall productivity of irrigation water and have negative impact on the other sectors competing on that limited resource.

Water policies thus can no longer be seen as localized interventions. The need for a comprehensive rather than fragmented—sector wise—assessment of policy interventions is essential. Likewise, policy intervention need not be seen as a top down decision-making process, but rather a participatory and iterative process that involves all stakeholders. Country sector and structural adjustment work that recognize such situations and opportunities call upon having analytical tools to allow assessment of water policies in an economy-wide manner and to stimulate a broad-based dialogue on policy interventions among many stakeholders.

In recent years we have also witnessed increased globalization and climate change considerations, both of which strongly suggest that water policy is no longer a sectoral, or regional, but an economy-wide matter. Recognizing this trend gave rise to studies of an economy-wide nature (see review in Dudu and Chumi, 2008; Johansson 2005). While many economy-wide analyses (mainly Computable General Equilibrium—CGE—models) have been published in the economic literature on water, little can be generalized mainly because these studies use different assumptions and structures of the economy. For example, many CGE studies on water that have been reported in the literature treat irrigated agriculture as one sector/activity. Such structures are only appropriate in economies where physical (soil quality, water availability, etc.), economic and social conditions (crop mixes, proximity to markets, farm size, water delivery costs, etc...) are similar across regions. However, spatial variation within economies makes that assumption of little use for simulation of real world policy interventions.

Recognizing the importance of having the ability to assess different policy-linkage and performance interactions, this paper considers policy interventions aimed at improving water allocation decisions, and assessing the impact on regions and sectors, by including both macro and micro considerations in a unified analytical framework. The paper draws from a recently completed set of country based case studies on water management policy interventions in Morocco, South Africa, Turkey and Mexico, all using a similar macro-micro CGE framework (Roe et al. 2005; Diao et al., 2008; Hassan et al., 2008; Cakmak et al., 2008; Yunez-Naude and Rojas Castro, 2008; Hassan and Thurlow, 2011). The country studies allow, for the first time, a comparison of a variety of policy interventions across various economic, institutional and physical situations, and generalization to situations in other countries.

The paper explains the macro-micro methodology used, the policies considered and applied, and the results and general conclusions. The paper is written to target policy makers. All technical aspects will be explained so that non-technical readership comprehends and appreciates the challenges faced by the researchers in developing and applying an economy-wide framework to analyze policies for water management. For the 3