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Integrated water and economic modelling of the impacts of water market instruments on the South African economy

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  • van Heerden, Jan H.
  • Blignaut, James
  • Horridge, Mark

Abstract

A static computable general equilibrium model of South Africa is adapted to compare new taxes on water demand by two industries, namely forestry, and irrigated field crops. Comparisons are made with respect to both the short and the long run, in terms of three target variables, namely (i) the environment; (ii) the economy; and (iii) equity. Since the taxes on the two industries do not raise the same amount of revenue, the target variables are calculated per unit of real government revenue raised by the new taxes (also referred to as the marginal excess burdens of the taxes). The model results are robust for moderate values of the water elasticity of demand in the two industries, in both the long and the short run. The tax on irrigated field crops performs better in terms of all three the target variables in the short run. In the long run the tax on irrigated filed crops is better in terms of water saving, but reduces real GDP and the consumption by poor households.

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  • van Heerden, Jan H. & Blignaut, James & Horridge, Mark, 2008. "Integrated water and economic modelling of the impacts of water market instruments on the South African economy," Ecological Economics, Elsevier, vol. 66(1), pages 105-116, May.
    • Handle: RePEc:eee:ecolec:v:66:y:2008:i:1:p:105-116
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    2. Alvaro Calzadilla & Katrin Rehdanz & Richard S.J. Tol, 2008. "The Eonomic Impact Of More Sustainable Water Use In Agriculture: A Computable General Equilibrium Analysis," Working Papers FNU-169, Research unit Sustainability and Global Change, Hamburg University, revised Dec 2008.
    3. James Blignaut & Jan van Heerden, 2009. "Is Water Shedding Next?," Working Papers 200918, University of Pretoria, Department of Economics.
    4. Glyn Wittwer, 2012. "Accelerated water savings and demand growth for farm outputs: impacts on the economy of the southern Murray-Darling Basin," Centre of Policy Studies/IMPACT Centre Working Papers g-232, Victoria University, Centre of Policy Studies/IMPACT Centre.
    5. Gill, Tania & Punt, Cecilia, 2010. "The Potential Impact of Increased Irrigation Water Tariffs in South Africa," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96425, African Association of Agricultural Economists (AAAE).
    6. 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.
    7. Lu, Wenjing & Li, Wei & Lin, Ji, 2022. "Damping effects of water and land constraints on economic growth in basin economic zones," Resources Policy, Elsevier, vol. 79(C).
    8. Feng Wu & Jinyan Zhan & Qian Zhang & Zhongxiao Sun & Zhan Wang, 2014. "Evaluating Impacts of Industrial Transformation on Water Consumption in the Heihe River Basin of Northwest China," Sustainability, MDPI, vol. 6(11), pages 1-14, November.
    9. Nicholas Kilimani & Jan van Heerden & Heinrich Bohlmann & Louise Roos, 2016. "Counting the Cost of Drought Induced Productivity Losses in an Agro-Based Economy: The Case of Uganda," Working Papers 201649, University of Pretoria, Department of Economics.
    10. Luckmann, Jonas & Grethe, Harald & McDonald, Scott & Orlov, Anton & Siddig, Khalid, 2013. "A general equilibrium approach to modelling multiple types and uses of water," Conference papers 332401, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    11. Calzadilla, Alvaro & Rehdanz, Katrin & Tol, Richard S.J., 2011. "The GTAP-W model: Accounting for water use in agriculture," Kiel Working Papers 1745, Kiel Institute for the World Economy (IfW Kiel).
    12. Brouwer, Roy & Hofkes, Marjan, 2008. "Integrated hydro-economic modelling: Approaches, key issues and future research directions," Ecological Economics, Elsevier, vol. 66(1), pages 16-22, May.
    13. Nechifor, Victor & Winning, Matthew, 2017. "The impacts of higher CO2 concentrations over global crop production and irrigation water requirements," Conference papers 332837, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    14. Calzadilla, Alvaro & Rehdanz, Katrin & Tol, Richard S.J., 2008. "Water scarcity and the impact of improved irrigation management: A CGE analysis," Conference papers 331788, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    15. Nicholas Kilimani, 2014. "Water Taxation and the Double Dividend Hypothesis," Working Papers 201451, University of Pretoria, Department of Economics.
    16. Deng, Xiangzheng & Zhao, Yonghong & Wu, Feng & Lin, Yingzhi & Lu, Qi & Dai, Jing, 2011. "Analysis of the trade-off between economic growth and the reduction of nitrogen and phosphorus emissions in the Poyang Lake Watershed, China," Ecological Modelling, Elsevier, vol. 222(2), pages 330-336.
    17. Mohamed A. Chemingui & Chokri Thabet, 2016. "Economy-Wide Analysis of Alternative Water Management Policies: A Comparative Analysis for Morocco and Tunisia," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(04), pages 1-27, December.
    18. Faust, Anne-Kathrin & Gonseth, Camille & Vielle, Marc, 2012. "The economic impact of climate driven changes in water availability in Switzerland," Conference papers 332185, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    19. Chokri Thabet, 2014. "Water Policy and Poverty Reduction in Rural Area: A Comparative Economy Wide Analysis for Morocco and Tunisia," Working Papers 860, Economic Research Forum, revised Nov 2014.
    20. Dellink, Rob & Brouwer, Roy & Linderhof, Vincent & Stone, Karin, 2011. "Bio-economic modeling of water quality improvements using a dynamic applied general equilibrium approach," Ecological Economics, Elsevier, vol. 71(C), pages 63-79.
    21. Cristina Sarasa & Jean-Marc Philip & Julio Sánchez-Chóliz, 2013. "A tax policy strategy faces with future water availability using a dynamic CGE approach," EcoMod2013 5349, EcoMod.
    22. Magdalena ZACHLOD-JELEC & Piotr KARP, 2010. "Responses of the Polish Economy to Demand and Supply Shocks under Alternative Fiscal Rules," EcoMod2010 259600174, EcoMod.
    23. Javier Martínez-Dalmau & Carlos Gutiérrez-Martín & Alfonso Expósito & Julio Berbel, 2023. "Analysis of Water Pricing Policy Effects in a Mediterranean Basin Through a Hydroeconomic Model," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 37(4), pages 1599-1618, March.
    24. Jeniffer Mutiga & Shadrack Mavengano & Su Zhongbo & Tsehaie Woldai & Robert Becht, 2010. "Water Allocation as a Planning Tool to Minimise Water Use Conflicts in the Upper Ewaso Ng’iro North Basin, Kenya," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 24(14), pages 3939-3959, November.
    25. Jacobsen, Lars-Bo & Nielsen, Max & Nielsen, Rasmus, 2016. "Gains of integrating sector-wise pollution regulation: The case of nitrogen in Danish crop production and aquaculture," Ecological Economics, Elsevier, vol. 129(C), pages 172-181.

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