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The TERM-H2O modeling experience in Australia

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  • Wittwer, Glyn

Abstract

This concerns CGE modelling development specifically on the Murray-Darling Basin in Australia. It outlines some of the key necessary elements for modelling. In particular, since farm production technologies in the basin are highly flexible, the supply side of a CGE model should reflect this flexibility. The bottom-up regions in the model are quite small, as it is important to distinguish regions between which water trading is possible from those in which such trading is not possible. Water accounting is incomplete if it does not include the contribution from rainfall. If surface water allocated by managers does not change, but rainfall is in deficit, the price of water will rise. We will struggle to capture this effect in a model which does not include rainfall, reflected both in the initial conditions of irrigation water requirements and in the possibility to ascribe shocks to depict reduced rainfall. TERM-H2O modeling of drought in the basin resulted in substantial regional job losses. The pre-GFC bio-fuels boom and growing demand for dairy products in China partly alleviated drought-induced income losses.

Suggested Citation

  • Wittwer, Glyn, 2015. "The TERM-H2O modeling experience in Australia," Conference papers 332657, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332657
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    File URL: https://ageconsearch.umn.edu/record/332657/files/7331.pdf
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    References listed on IDEAS

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    1. Wittwer, Glyn & Griffith, Marnie, 2011. "Modelling drought and recovery in the southern Murray-Darling basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(3), pages 1-18, September.
    2. Kym Anderson & Signe Nelgen & Ernesto Valenzuela & Glyn Wittwer, 2009. "Economic contributions and characteristics of grapes and wine in AustraliaÂ’s wine regions," Centre for International Economic Studies Working Papers 2009-01, University of Adelaide, Centre for International Economic Studies.
    3. Peter B. Dixon & Maureen T. Rimmer & Glyn Wittwer, 2011. "Saving the Southern Murray‐Darling Basin: The Economic Effects of a Buyback of Irrigation Water," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 153-168, March.
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