Advertisement

Analyzing Future Water Scarcity in Computable General Equilibrium Models

  • Jing LiuEmail author
  • Tom Hertel
  • Farzad Taheripour
Chapter
Part of the Advances in Applied General Equilibrium Modeling book series (AAGEM)

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.

Keywords

Model comparison Sectoral and spatial aggregation Water scarcity CGE modeling 

References

  1. Berrittella M, Hoekstra AY, Rehdanz K, Roson R, Tol RSJ (2007) The economic impact of restricted water supply: a computable general equilibrium analysis. Water Res 41:1799–1813CrossRefGoogle Scholar
  2. Cai X, Rosegrant MW (2002) Global water demand and supply projections part 1: a modeling approach. Water Int 27:159–169CrossRefGoogle Scholar
  3. Cakmak E, Dudu H, Saracoglu S (2009) Climate change and agriculture in Turkey: a CGE modeling approach. In: EconAnadolu 2009: Anadolu international conference in economicsGoogle Scholar
  4. Calzadilla A, Rehdanz K, Tol RSJ (2010) The economic impact of more sustainable water use in agriculture: a computable general equilibrium analysis. J Hydrol 384:292–305CrossRefGoogle Scholar
  5. Decaluwe B, Patry A, Savard L (1999) When water is no longer heaven sent: comparative pricing analysis in a AGE model. Département d’économique, Université Laval Working Paper 9908Google Scholar
  6. Diao X, Roe T (2003) Can a water market avert the “double-whammy” of trade reform and lead to a “win–win” outcome? J Environ Econ Manag 45:708–723CrossRefGoogle Scholar
  7. Dinar A (2014) Water and economy-wide policy interventions. Found Trends R Microecon 10:85–165CrossRefGoogle Scholar
  8. Dixon PB, Rimmer MT, Wittwer G (2011) Saving the Southern Murray-darling basin: the economic effects of a buyback of irrigation water. Econ Rec 87:153–168CrossRefGoogle Scholar
  9. Dudu H, Chumi S (2008) Economics of irrigation water management: a literature survey with focus on partial and general equilibrium models. SSRN Scholarly Paper No. ID 1106504. Rochester, NYGoogle Scholar
  10. Falkenmark M, Lannerstad M (2005) Consumptive water use to feed humanity - curing a blind spot. Hydrol Earth Syst Sci 9:15–28CrossRefGoogle Scholar
  11. Garrick D, Whitten SM, Coggan A (2013) Understanding the evolution and performance of water markets and allocation policy: a transaction costs analysis framework. Ecol Econ 88:195–205CrossRefGoogle Scholar
  12. Gomez CM, Tirado D, Rey-Maquieira J (2004) Water exchanges versus water works: insights from a computable general equilibrium model for the Balearic Islands. Water Resour Res 40Google Scholar
  13. Griffith M (2012) Water resources modeling: a review. In: Wittwer G (ed) Economic modeling of water: the Australian CGE experience. Springer, Dordrecht, pp 59–77CrossRefGoogle Scholar
  14. Hassan R, Thurlow J (2011) Macro–micro feedback links of water management in South Africa: CGE analyses of selected policy regimes. Agric Econ 42:235–247.  https://doi.org/10.1111/j.1574-0862.2010.00511.xCrossRefGoogle Scholar
  15. Hertel TW (1997) Global trade analysis: modeling and applications. Cambridge University Press, New YorkGoogle Scholar
  16. Hertel TW, Golub AA, Jones AD, O’Hare M, Plevin RJ, Kammen DM (2010) Effects of US Maize ethanol on global land use and greenhouse gas emissions: estimating market-mediated responses. Bioscience 60:223–231CrossRefGoogle Scholar
  17. Kahsay TN, Kuik O, Brouwer R, van der Zaag P (2015) Estimation of the transboundary economic impacts of the Grand Ethiopia Renaissance Dam: a computable general equilibrium analysis. Water Resour Econ 10:14–30CrossRefGoogle Scholar
  18. Keeney R, Hertel TW (2009) The indirect land use impacts of United States biofuel policies: the importance of acreage, yield, and bilateral trade responses. Am J Agric Econ 91:895–909CrossRefGoogle Scholar
  19. Koopman JF, Kuik O, Tol RSJ, Brouwer R (2015) Water scarcity from climate change and adaptation response in an international river basin context. Clim Change Econ 06:1550004CrossRefGoogle Scholar
  20. Liu J, Hertel TW, Taheripour F, Zhu T, Ringler C (2014) International trade buffers the impact of future irrigation shortfalls. Glob Environ Change 29:22–31CrossRefGoogle Scholar
  21. Luckmann J, Grethe H, McDonald S, Orlov A, Siddig K (2014) An integrated economic model of multiple types and uses of water. Water Resour Res 50:3875–3892CrossRefGoogle Scholar
  22. Maupin MA, Kenny JF, Hutson SS, Lovelace JK, Barber NL, Linsey KS (2014) Estimated use of water in the United States in 2010. USGS No. 1405. U.S. Geological Survey, Reston, VAGoogle Scholar
  23. Monfreda C, Ramankutty N, Foley JA (2008) Farming the planet: 2. Geographic distribution of crop areas, yields, physiological types, and net primary production in the year 2000. Glob Biogeochem Cycles 22Google Scholar
  24. Olmstead SM (2014) Climate change adaptation and water resource management: a review of the literature. Energy Econ 46:500–509CrossRefGoogle Scholar
  25. Ponce R, Bosello F, Giupponi C (2012) Integrating water resources into computable general equilibrium models - a survey. Fondazione Eni Enrico Mattei Work, PapGoogle Scholar
  26. Portmann FT, Siebert S, Döll P (2010) MIRCA2000—Global monthly irrigated and rainfed crop areas around the year 2000: a new high-resolution data set for agricultural and hydrological modeling. Glob Biogeochem Cycles 24Google Scholar
  27. Ramankutty N, Evan AT, Monfreda C Foley JA (2008) Farming the planet: 1. Geographic distribution of global agricultural lands in the year 2000. Glob Biogeochem Cycles 22Google Scholar
  28. Rosegrant MW, Ringler C, Zhu T, Tokgoz S, Bhandary P (2013) Water and food in the bioeconomy—challenges and opportunities for development. Agric Econ 44:139–150CrossRefGoogle Scholar
  29. Siebert S, Döll P (2010) Quantifying blue and green virtual water contents in global crop production as well as potential production losses without irrigation. J Hydrol 384:198–217CrossRefGoogle Scholar
  30. Taheripour F, Hertel T, Liu J (2013) Introducing water by river basin into the GTAP-BIO model: GTAP-BIO-W. GTAP Work. Pap. No 77. http://www.gtap.agecon.purdue.edu/resources/res_display.asp?RecordID=4304. Accessed 27 Sept 2018
  31. Wittwer G (ed) (2012) Economic modeling of water: the Australian CGE experience. Springer, Dordrecht, New YorkGoogle Scholar
  32. Young RA (1986) Why are there so few transactions among water users? Am J Agric Econ 68(5):1143–1151Google Scholar
  33. Zhu T, Ringler C, Iqbal MM, Sulser TB, Goheer MA (2013) Climate change impacts and adaptation options for water and food in Pakistan: scenario analysis using an integrated global water and food projections model. Water Int 38(5), pp.651-669.Google Scholar

Copyright information

© Springer Nature Singapore Pte Ltd. 2019

Authors and Affiliations

  1. 1.Department of Agricultural EconomicsPurdue UniversityWest LafayetteUSA

Personalised recommendations