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Impacts of reallocation of resource constraints on the northeast economy of Brazil

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  • Hewings, Geoffrey J.D.
  • Dridi, Chokri
  • Guilhoto, Joaquim J.M.

Abstract

There is a growing recognition in the economic development literature that one of the major impediments to growth and development in the next will be access to water. In recognition of this emerging problem, the present research aims to provide a formal link between water consumption and economic growth and development. This is accomplished by linking an econometric input-output model of the Northeast Brazil economy to a water allocation model. The work can be considered as an important first step in placing water allocation the policy-making agenda; additional steps will require links to issues of climate change and water availability, potential water transfers between regions and sectors and consideration of the way alternative development strategies can be proposed that are in harmony with water availability. The results revealed that water re-allocation played only an important role directly on the agricultural sectors, the major consumers of water in the Northeast of Brazil. Re-allocation was driven by an objective to maximize value added. Over the period 1999-2012, the impact on the six agricultural sectors was to reduce their output and emp loyment by of 15% annually. The reduction in employment in the rest of the economy was a little over 1% annually. However, since the agricultural sectors continue to employ a significant percentage of the labor force, the aggregate loss of employment amo unted to 6% on average, over 1 million jobs annually. These initial results suggest the need for an active link between policy making and economic development when resource constraints are present. Some balance has to be provided between allocation and reallocation on the one hand perhaps driven by concerns with economic efficiency against anticipated losses of employment for part of the labor force with few other alternatives.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38210.

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Date of creation: Aug 2005
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Handle: RePEc:pra:mprapa:38210

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Keywords: Brazil; water; input-output; stochastic linear programming;

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  1. Stein W. Wallace & Stein-Erik Fleten, 2002. "Stochastic programming in energy," GE, Growth, Math methods 0201001, EconWPA, revised 13 Nov 2003.
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Cited by:
  1. Llop Llop, Maria & Ponce Alifonso, Xavier,, 2012. "Agriculture, technological change and environmental sustainability: Looking for a win-win water policy strategy," Working Papers 2072/203158, Universitat Rovira i Virgili, Department of Economics.
  2. Esther Velázquez & M. Alejandro Cardenete & Geoffrey J.D. Hewings, 2007. "Water price and water reallocation in Andalusia. A computable general equilibrium approach," Working Papers 07.04, Universidad Pablo de Olavide, Department of Economics.
  3. Llop Llop, Maria, 2011. "Water Reallocation in the Input-Output Model," Working Papers 2072/151815, Universitat Rovira i Virgili, Department of Economics.
  4. Pouchkarev, Igor & Spronk, Jaap & Trinidad Segovia, Juan E., 2006. "Empirical Insights on the Heterogeneity of the Spanish Stock Market/Un Análisis Empírico De La Heterogeneidad Del Mercado De Capitales Español," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 24, pages 1091-1106, Diciembre.
  5. Llop Llop, Maria & Ponce Alifonso, Xavier, 2011. "A never-ending debate: Demand versus supply water policies. A CGE analysis for Catalonia," Working Papers 2072/152139, Universitat Rovira i Virgili, Department of Economics.

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