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Beyond Water Stress: Structural Adjustment and Macroeconomic Consequences of the Emerging Water Scarcity

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  • Roberto Roson

Abstract

This work analyzes some system-wide macroeconomic consequences of lower (sustainable) water availability, when global economic growth is postulated according to the Shared Socio-Economic Pathway 1 (SSP1), for the reference year 2050. After finding that the rather optimistic forecasts of economic development cannot be met in most water scarce macro-regions, we assess what consequences for the structure of the economy, welfare and the terms of trade, the insufficiency of water resources would imply. The analysis is undertaken by means of numerical simulations with a global computable general equilibrium model, under a set of alternative hypotheses. In particular, we consider whether (or not) the regional economic systems have a differentiated capability of adaptation (by means of innovation and modification of economic processes), and whether (or not) the scarce water resources can be allocated among industries, such that more water is assigned where its economic value is greater.

Suggested Citation

  • Roberto Roson, 2017. "Beyond Water Stress: Structural Adjustment and Macroeconomic Consequences of the Emerging Water Scarcity," IEFE Working Papers 95, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    • Handle: RePEc:bcu:iefewp:iefewp95
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    References listed on IDEAS

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    1. Reimer, Jeffrey J., 2012. "On the economics of virtual water trade," Ecological Economics, Elsevier, vol. 75(C), pages 135-139.
    2. Roson, Roberto & Damania, Richard, 2017. "The macroeconomic impact of future water scarcity," Journal of Policy Modeling, Elsevier, vol. 39(6), pages 1141-1162.
    3. Rosegrant, Mark W. & Cai, Ximing & Cline, Sarah A., 2002. "Global water outlook to 2025," Food policy reports 14, International Food Policy Research Institute (IFPRI).
    4. Roberto Roson & Richard Damania, 2016. "Simulating the Macroeconomic Impact of Future Water Scarcity: an Assessment of Alternative Scenarios," IEFE Working Papers 84, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    5. Roberto Roson & Richard Damania, the World Bank, Washington D.C., 2016. "Simulating the Macroeconomic Impact of Future Water Scarcity," EcoMod2016 9167, EcoMod.
    6. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    7. Elmar Kriegler & Jae Edmonds & Stéphane Hallegatte & Kristie Ebi & Tom Kram & Keywan Riahi & Harald Winkler & Detlef Vuuren, 2014. "A new scenario framework for climate change research: the concept of shared climate policy assumptions," Climatic Change, Springer, vol. 122(3), pages 401-414, February.
    8. Moolman, C.E. & Blignaut, J.N. & van Eyden, R., 2006. "Modelling the marginal revenue of water in selected agricultural commodities: A panel data approach," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 45(1), pages 1-11, March.
    9. Detlef Vuuren & Elmar Kriegler & Brian O’Neill & Kristie Ebi & Keywan Riahi & Timothy Carter & Jae Edmonds & Stephane Hallegatte & Tom Kram & Ritu Mathur & Harald Winkler, 2014. "A new scenario framework for Climate Change Research: scenario matrix architecture," Climatic Change, Springer, vol. 122(3), pages 373-386, February.
    10. Brian O’Neill & Elmar Kriegler & Keywan Riahi & Kristie Ebi & Stephane Hallegatte & Timothy Carter & Ritu Mathur & Detlef Vuuren, 2014. "A new scenario framework for climate change research: the concept of shared socioeconomic pathways," Climatic Change, Springer, vol. 122(3), pages 387-400, February.
    11. Kristie Ebi & Stephane Hallegatte & Tom Kram & Nigel Arnell & Timothy Carter & Jae Edmonds & Elmar Kriegler & Ritu Mathur & Brian O’Neill & Keywan Riahi & Harald Winkler & Detlef Vuuren & Timm Zwickel, 2014. "A new scenario framework for climate change research: background, process, and future directions," Climatic Change, Springer, vol. 122(3), pages 363-372, February.
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    Cited by:

    1. Delorit, Justin D. & Parker, Dominic P. & Block, Paul J., 2019. "An agro-economic approach to framing perennial farm-scale water resources demand management for water rights markets," Agricultural Water Management, Elsevier, vol. 218(C), pages 68-81.

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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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