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The macroeconomic impact of future water scarcity

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  • Roson, Roberto
  • Damania, Richard

Abstract

In this paper we consider some of the economic implications of climate change scenarios as described in the Shared Socioeconomic Pathways (SSPs). By comparing potential water demand with estimates of (sustainable) water availability in different regions, we identify regions that are likely to be constrained in their future economic growth potential by the scarcity of water resources. We assess the macroeconomic impact of water scarcity under alternative allocation rules finding that, by assigning more water to sectors in which it has a higher value, shifting production to less water intensive sectors, and importing more water intensive goods, constrained regions can effectively neutralize these water related climate risks and adapt to a changing water environment. However, this adaptation effort is likely to imply some radical changes in water management policies.

Suggested Citation

  • Roson, Roberto & Damania, Richard, 2017. "The macroeconomic impact of future water scarcity," Journal of Policy Modeling, Elsevier, vol. 39(6), pages 1141-1162.
    • Handle: RePEc:eee:jpolmo:v:39:y:2017:i:6:p:1141-1162
    DOI: 10.1016/j.jpolmod.2017.10.003
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    References listed on IDEAS

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    Cited by:

    1. Wolfgang Britz & Roberto Roson & Martina Sartori, 2019. "SSP Long Run Scenarios for European NUTS2 Regions," Working Papers 2019: 22, Department of Economics, University of Venice "Ca' Foscari".
    2. Shinichiro Fujimori & Toshichika Iizumi & Tomoko Hasegawa & Jun’ya Takakura & Kiyoshi Takahashi & Yasuaki Hijioka, 2018. "Macroeconomic Impacts of Climate Change Driven by Changes in Crop Yields," Sustainability, MDPI, vol. 10(10), pages 1-14, October.
    3. Roberto Roson, 2017. "Beyond Water Stress: Structural Adjustment and Macroeconomic Consequences of the Emerging Water Scarcity," Working Papers 2017:07, Department of Economics, University of Venice "Ca' Foscari".
    4. Yang Wei & Boyang Sun, 2021. "Optimizing Water Use Structures in Resource-Based Water-Deficient Regions Using Water Resources Input–Output Analysis: A Case Study in Hebei Province, China," Sustainability, MDPI, vol. 13(7), pages 1-15, April.
    5. Yuanjie Li & Zhuoying Zhang & Minjun Shi, 2019. "Restrictive Effects of Water Scarcity on Urban Economic Development in the Beijing-Tianjin-Hebei City Region," Sustainability, MDPI, vol. 11(8), pages 1-23, April.
    6. 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).
    7. Wolfgang Britz & Roberto Roson, 2018. "Exploring Long Run Structural Change with a Dynamic General Equilibrium Model," Working Papers 2018: 12, Department of Economics, University of Venice "Ca' Foscari".
    8. Ortuzar, Iban & Serrano, Ana & Xabadia, Àngels, 2023. "Macroeconomic impacts of water allocation under droughts. Accounting for global supply chains in a multiregional context," Ecological Economics, Elsevier, vol. 211(C).

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    More about this item

    Keywords

    Water; Economic growth; Shared socio-economic pathways; Computable general equilibrium; Virtual water trade;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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