Water and production reallocation in the Spanish agri-food system

Multiregional input–output (MRIO) and computable general equilibrium (CGE) models have greatly facilitated approaches to environmental and economic problems in recent years. This paper examines regional reallocation criteria intended to reduce water constraints in the Spanish economy. Our goal is to assess the impact of alternative allocation scenarios for regional production on the country’s agriculture and agri-food industries, and the associated effects on water resources along the whole length of food supply chains, which display significant asymmetries between regions caused by imbalances in the availability of water resources. We design a CGE model using an MRIO database for Spain. Our scenarios are based on increases in the production of water-intensive crops in regions with more abundant water resources and the development of more sustainable food supply chains between farms and the agri-food industry. Our findings point to a series of policy options that could be applied to ensure successful outcomes in both directions.