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Economic regional impacts of water transfers: the role of factor mobility in a case study of the agricultural sector in the Balearic Islands

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  • Tirado, Dolores
  • Lozano, Javier
  • Gomez Gomez, Carlos Mario

Abstract

Using a CGE model for the Balearic Islands, we simulate the effects of an agricultural water market in the farming sector facing reductions in the water endowment. The market lessens the negative effects on farming communities of short-term water restrictions associated with cyclical droughts. However, in scenarios of permanent reductions, such as those envisaged by global warming predictions or those that result from the implementation of the European Water Framework Directive, a water market may aggravate the negative effects of water shortage. Therefore, the paper shows that generalizations cannot be made about the effects of water markets on farming communities.

Suggested Citation

  • Tirado, Dolores & Lozano, Javier & Gomez Gomez, Carlos Mario, 2010. "Economic regional impacts of water transfers: the role of factor mobility in a case study of the agricultural sector in the Balearic Islands," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 10(02), pages 1-20, December.
    • Handle: RePEc:ags:earnsa:99095
    DOI: 10.22004/ag.econ.99095
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    References listed on IDEAS

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    1. Charles W. Howe & Jeffrey K. Lazo & Kenneth R. Weber, 1990. "The Economic Impacts of Agriculture-to-Urban Water Transfers on the Area of Origin: A Case Study of the Arkansas River Valley in Colorado," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(5), pages 1200-1204.
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    Cited by:

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    2. Dinar, Ariel, 2012. "Economy-wide implications of direct and indirect policy interventions in the water sector: lessons from recent work and future research needs," Policy Research Working Paper Series 6068, The World Bank.
    3. Teotónio, Carla & Rodríguez, Miguel & Roebeling, Peter & Fortes, Patrícia, 2020. "Water competition through the ‘water-energy’ nexus: Assessing the economic impacts of climate change in a Mediterranean context," Energy Economics, Elsevier, vol. 85(C).

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