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A never-ending debate: Demand versus supply water policies. A CGE analysis for Catalonia

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  • Llop Llop, Maria
  • Ponce Alifonso, Xavier

Abstract

Water scarcity is a long-standing problem in Catalonia, as there are significant differences in the spatial and temporal distribution of water through the territory. There has consequently been a debate for many years about whether the solution to water scarcity must be considered in terms of efficiency or equity, the role that the public sector must play and the role that market-based instruments should play in water management. The aim of this paper is to use a Computable General Equilibrium (CGE) model to analyze the advantages and disadvantages associated with different policy instruments, from both a supply and a demand viewpoint, which can be applied to water management in Catalonia. We also introduce an ecological sector in our CGE model, allowing us to analyze the environmental impact of the alternative policies simulated. The calibration of the exogenous variables of the CGE model is performed by using a Social Accounting Matrix (SAM) for the Catalan economy with 2001 data. The results suggest that taking into account the principle of sustainability of the resource, the policy debate between supply and demand in water policies is obsolete, and a new combination of policies is required to respect the different values associated with water. Keywords: Water Policies; Computable General Equilibrium Model; Economic Effects; Environmental Effects.

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File URL: http://hdl.handle.net/2072/152139
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Bibliographic Info

Paper provided by Universitat Rovira i Virgili, Department of Economics in its series Working Papers with number 2072/152139.

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Date of creation: 2011
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Handle: RePEc:urv:wpaper:2072/152139

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Keywords: Aigua -- Polítiques de gestió; 33 - Economia;

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  1. 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.
  2. Hewings, Geoffrey J.D. & Dridi, Chokri & Guilhoto, Joaquim J.M., 2005. "Impacts of reallocation of resource constraints on the northeast economy of Brazil," MPRA Paper 38210, University Library of Munich, Germany.
  3. Kenneth Arrow & Partha Dasgupta & Lawrence Goulder & Gretchen Daily & Paul Ehrlich & Geoffrey Heal & Simon Levin & Karl-Göran Mäler & Stephen Schneider & David Starrett & Brian Walker, 2004. "Are We Consuming Too Much?," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 147-172, Summer.
  4. Maria Berrittella & Katrin Rehdanz & Arjen Y. Hoekstra & Roberto Roson & Richard S.J. Tol, 2006. "The Economic Impact Of Restricted Water Supply: A Computable General Equilibrium Analysis," Working Papers FNU-93, Research unit Sustainability and Global Change, Hamburg University, revised Jul 2006.
  5. Maria Llop, 2012. "The role of saving and investment in a SAM price model," The Annals of Regional Science, Springer, vol. 48(1), pages 339-357, February.
  6. Noelwah R. Netusil & Thomas R. Harris & Chang K. Seung & Jeffrey E. Englin, 2000. "Impacts of water reallocation: A combined computable general equilibrium and recreation demand model approach," The Annals of Regional Science, Springer, vol. 34(4), pages 473-487.
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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.

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