Esther Velázquez () (Department of Economics, Universidad Pablo de Olavide) M. Alejandro Cardenete () (Department of Economics, Universidad Pablo de Olavide) Geoffrey J.D. Hewings () (Regional Economics Application Laboratory and University of Illinois)
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The objective of this work is to analyze the effects that an increase in the price of the water delivered to the agriculture sector to promote the conservation of this resource would have on the efficiency of the consumption of water and the possible reallocation of water to the remaining productive sectors. The analysis is motivated by the fact that the agriculture consumes a disproportionately large amount of water at very low prices. The methodology that will be used to explore the implications on the economy will be a computable general equilibrium model (CGE), previously designed for an analysis of the direct taxes of the Andalusian economy (Cardenete and Sancho, 2003), but now enhanced and extended to include emissions of pollutants and the introduction of environmental taxes (André, Cardenete and Velázquez, 2005). This model has been further modified to introduce the variations in the water price that we will try to analyze by means of a tariff applied on the production structure. The main conclusion drawn indicates that, although the tax policy applied does not correspond to a significant water saving in the above-mentioned sector, a reallocation of this resource is achieved which seems to generate a more efficient and more rational behavior from a production point of view.
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Paper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number
07.04.
Find related papers by JEL classification: D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
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