Analyzing Future Water Scarcity in Computable General Equilibrium Models

Abstract

Starting with an elaborate global CGE model, we investigate three simplifications: (1) tackling global questions in a national level model; (2) collapsing irrigated and rainfed crop production into a single sector; and (3) removing river basin boundaries within a country. In each case, we compare their performance in predicting the impacts of future irrigation scarcity on international trade, crop output, land use change and welfare , relative to the full scale model. We find that, if the research question has to do with changes in national-scale trade, production and welfare changes, it may be sufficient to ignore the sub-national hydrological boundaries in global economic analysis of water scarcity . However, when decision makers have an interest in the distribution of inputs and outputs within a region, preserving the river basin and sectoral detail in the model brings considerable added value to the analysis.

Appendix

In the IMPACT modeling suite, natural water availability and supply for irrigation are determined with the Global Hydrologic Model (IGHM) and the Water Simulation Model (IWSM), respectively, as illustrated in Fig. 3.9. The IGHM is a semi-distributed hydrological model that simulates evapotranspiration, surface runoff and base flow on 0.5° latitude × 0.5° longitude grid cells over global land surfaces, except for Antarctica. It uses a temperature-index method adapted from NOAA’s SNOW-17 model to simulate snowpack accumulation and ablation. Gridded hydrological output is spatially aggregated to the Food Production Units (FPUs), weighted by grid cell areas, for use by the IWSM model.

Table 3.3 AEZs (B1–B20) by GTAP -BIO-W region

Table 3.4 All sectors covered by the GTAP-BIO-W model

Table 3.5 Water scarcity shock (%)

Table 3.6 A comparison of the welfare change across models, all regions included

Fig. 3.5

The structure of primary inputs for irrigate and rainfed crop production

Fig. 3.6

Transformation parameters governing the allocation of managed land in the GTAP-BIO-W model

Fig. 3.7

Evolving irrigation water supply reliability (Year 2030 (top) relative to year 2000 (bottom)). The index value of one indicates that all the potential irrigation demand is satisfied by the actual irrigation water consumption . A smaller index value indicates more severe irrigation water shortfall.)

Fig. 3.8

Deviations of irrigated land use change (in 1000 ha) from the benchmark model. (Top panel (a) shows the deviations produced by the combined I&R model and the unified basin model. Bottom panel (b) shows the deviations produced by the respective single-region models.)

Fig. 3.9

Adapted from Zhu et al. (2013)

Structure of the global hydrological model IGHM and water simulation model IWSM.

The IWSM uses monthly runoff and potential evapotranspiration from the IGHM to simulate water management and allocation processes for river basins, using FPUs as the fundamental unit of water balance. It simulates reservoir regulation of natural flow and abstraction of surface and groundwater based on projected total water demand for domestic, industrial, livestock and irrigation sectors. Irrigation water demand is estimated using effective rainfall and potential evapotranspiration generated by the IGHM, plus irrigated areas, cropping patterns, crop characteristics, and basin irrigation efficiency. With projected sectoral water demand, the IWSM optimizes water supply according to demand, subject to water availability and capacity constraints of water infrastructure . Sequentially, the model first calculates total monthly water supply; second, it allocates the total supply to water-use sectors on a priority-based manner, assuming domestic water demand is the first priority, industrial and livestock demand is the second priority, and the remaining water is available for irrigation. Total irrigation water supply is further allocated to crops according to crop water requirements. As a water scarcity indicator, irrigation water supply reliability is determined as the ratio of total irrigation water supply to demand, on an annual basis.