Human and freshwater ecosystems are intrinsically interconnected. To better design effective policies, modeling tools and valuation methods are necessary to help understanding the complex reciprocal linkages between ecosystem processes and human actions, and coupled human and natural systems (CNHS) sets up a critical paradigm to do so. It is thus of both academic and empirical appeal to integrate reliable economic valuation methods with tools and models from multiple disciplines in order to quantify the feedbacks between human and natural systems and to inform better policy design.

Using freshwater resources as an example, this dissertation contains three essays which integrate natural science and economics models to understand how changes in human behavior and societal policies lead to changes in ecosystem services, and how changes in ecosystem services, in return, affect human decisions. The first two essays focus on agricultural nonpoint source pollution problems in United States and examines the impacts of potential water polices on both water polluters and water demanders. Specifically, in the first essay, a novel coupling between an ecological model of within-lake hydrodynamics and an economic model of hedonic property prices has been developed to quantify the connections between nutrient loading, lake water quality, and economic outcomes. Linking ecological processes with human decision-making provides a basis for enhanced evidence-based decision making in the context of reducing nonpoint-source pollution. In the second essay, an economic mathematical programming model is coupled with an agro-ecosystem model to investigate the behavioral adjustments and environmental pollution outcomes of water quality policies. A complete quantification of costs from all regulating sources are necessary to help pinpoint the efficient water policy design and reflecting the connection between human decisions and ecosystem processes. The third essay focus on the water quantity problem in another developed country, Australia. A discrete choice experiment method has been explored and used to provide estimates of willingness to pay for purchasing irrigation rights to restore a Ramsar-convention wetland. Water policy scenario described in this essay could directly affect the feedback between human and ecosystem processes and serve as a baseline for future planning and policy designs.

By offering both conceptual and methodological advancements, this dissertation aims to improve the understanding of coupled human and natural systems and the implementation of water policies. This dissertation also provides a framework to establish multi-disciplinary dialogues and cooperation between scientists and economists in the search of efficient water polices.