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General equilibrium modelling of the direct and indirect economic impacts of water quality improvements in the Netherlands at national and river basin scale

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  • Brouwer, Roy
  • Hofkes, Marjan
  • Linderhof, Vincent

Abstract

The main objective of the study presented in this paper is to estimate the direct and indirect economic impacts of water quality policy scenarios in the Netherlands focusing on the reduction of emission levels of nutrients and a number of eco-toxicological substances. For this purpose, an Applied General Equilibrium (AGE) model consisting of 27 production sectors is extended to water through the inclusion of substitution elasticities between labour, capital and emissions to water in the sectors' production functions. The macro-economic costs of a 10, 20 and 50% reduction of the emission levels in the year 2000 of ten priority substances in the EU Water Framework Directive vary between 0.2 and 9.4% of Net National Income (NNI). A large share of the total economic costs are borne by important sources of pollution like commercial shipping, the chemical and metal industry. However, important spin-off effects due to adaptation take place in the tertiary service sector. Besides the estimation of the economy-wide impacts of water quality improvements, the novelty of the study presented here is found in the downscaling of national and sector results to river basin level and the estimation of shadow prices for water-polluting substances through the introduction of an emission permits market.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 66 (2008)
Issue (Month): 1 (May)
Pages: 127-140

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Handle: RePEc:eee:ecolec:v:66:y:2008:i:1:p:127-140

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Web page: http://www.elsevier.com/locate/ecolecon

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  1. Beavis, Brian & Walker, Martin, 1979. "Interactive pollutants and joint abatement costs: Achieving water quality standards with effluent charges," Journal of Environmental Economics and Management, Elsevier, vol. 6(4), pages 275-286, December.
  2. Ing-Marie Gren & Paul Jannke & Katarina Elofsson, 1997. "Cost-Effective Nutrient Reductions to the Baltic Sea," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 10(4), pages 341-362, December.
  3. Bonham, John G. & Bosch, Darrell J. & Pease, James W., 2006. "Cost-Effectiveness of Nutrient Management and Buffers: Comparisons of Two Spatial Scenarios," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(01), April.
  4. Okadera, Tomohiro & Watanabe, Masataka & Xu, Kaiqin, 2006. "Analysis of water demand and water pollutant discharge using a regional input-output table: An application to the City of Chongqing, upstream of the Three Gorges Dam in China," Ecological Economics, Elsevier, vol. 58(2), pages 221-237, June.
  5. Tao Wang, 2006. "Cost Effectiveness in River Management: Evaluation of Integrated River Policy System in Tidal Ouse," Working Papers 2006.142, Fondazione Eni Enrico Mattei.
  6. Gerlagh, Reyer & Dellink, Rob & Hofkes, Marjan & Verbruggen, Harmen, 2002. "A measure of sustainable national income for the Netherlands," Ecological Economics, Elsevier, vol. 41(1), pages 157-174, April.
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Cited by:
  1. Halkos, George, 2013. "Cost-effectiveness analysis in reducing nutrient loading in Baltic and Black Seas: A review," MPRA Paper 52296, University Library of Munich, Germany.
  2. 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.

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