Abstract
<title>Abstract</title> <p>While global climate projections indicate a radical shift in water availability, a critical knowledge gap remains in bridging the disconnect between micro-scale productive efficiency and macro-scale systemic risk. To address this, we develop and present a hierarchical aggregation framework that integrates individual crop-level holding and urban hubs water demands into unified, basin-wide welfare functions. This bottom-up methodology is based on publicly available national statistical databases. The proposed methodology is applied, for illustrative purposes, to the Upper Genil River System through simulations covering a period of 65 years, from 1950 to 2015. The model's architecture ensures that water management policies are grounded in the heterogeneous behaviour of diverse users across an entire river basin. This hierarchical structure allows us to identify thresholds where systemic welfare losses exceed critical levels, triggering socio-economic disruptions that remain invisible in flattened statistical and empirical models. Our results demonstrate that resolving localized economic constraints at a fine level of detail is critical for capturing how externalities emerge, propagate, and ultimately shape welfare outcomes ---processes that can remain hidden in highly aggregated models---. By anchoring reliable water economic theory in empirical, multi-scale official data, this framework provides a highly scalable tool designed for integrated water resource management from the basin to national levels, ensuring resilient governance in water-stressed regions worldwide.</p>