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Trade-offs in water policy: System-wide implications of changing water availability and agricultural productivity in the Mediterranean economies by 2050

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  • Roberto Roson

    ()
    (Department of Economics, University Of Venice Cà Foscari)

  • Martina Sartori

    (Scuola di Studi Internazionali, University of Trento)

Abstract

We evaluate the structural consequences of water availability scenarios in the Mediterranean, following a multidisciplinary approach and a sequential modelling methodology. This includes an assessment of future water availability and a general equilibrium macroeconomic analysis of changes in agricultural productivity. Lower productivity in agriculture, induced by reduced water availability, generates negative consequences in terms of real income and welfare. The magnitude of the loss depends on the amount of the productivity shock, but also on the share of agricultural activities in the economy and on the stringency of the environmental regulation. We find evidence of a dramatic cut in the supply of water for agriculture in the Middle East. We consider alternative scenarios, differing in terms of stringency of environmental regulation and assumptions about water efficiency. The largest welfare losses turn out to be in Morocco and Tunisia, in the “worst” scenario NM. Other very relevant impacts can be observed in Turkey, Italy and Rest of Middle East and North Africa (XMENA). There are also clear differences among the scenarios. First, applying a constraint on access to environmental water reserves only for Europe does make a big difference for non-European countries (Morocco, Tunisia and XMENA), implying that governments in the Middle-East could respond to increasing water scarcity by accepting, to some extent, lower environmental quality (deterioration of aquatic environments). Second, improvements in water efficiency, as envisaged in the simulation exercise, appear to curb the economic impact of water scarcity quite significantly. This is especially true for countries in the North, whereas efficiency does not compensate for a strict environmental policy in the South.

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Bibliographic Info

Paper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2013:21.

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Length: 22
Date of creation: 2013
Date of revision:
Handle: RePEc:ven:wpaper:2013:21

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Keywords: Climate change; water use; agriculture; General Equilibrium Models; Mediterranean.;

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  1. Novo, P. & Garrido, A. & Varela-Ortega, C., 2009. "Are virtual water "flows" in Spanish grain trade consistent with relative water scarcity?," Ecological Economics, Elsevier, Elsevier, vol. 68(5), pages 1454-1464, March.
  2. Allouche, Jeremy, 2011. "The sustainability and resilience of global water and food systems: Political analysis of the interplay between security, resource scarcity, political systems and global trade," Food Policy, Elsevier, Elsevier, vol. 36(Supplemen), pages S3-S8, January.
  3. Khan, Shahbaz & Hanjra, Munir A., 2009. "Footprints of water and energy inputs in food production - Global perspectives," Food Policy, Elsevier, Elsevier, vol. 34(2), pages 130-140, April.
  4. Wichelns, Dennis, 2001. "The role of `virtual water' in efforts to achieve food security and other national goals, with an example from Egypt," Agricultural Water Management, Elsevier, Elsevier, vol. 49(2), pages 131-151, July.
  5. Qadir, M. & Sharma, B.R. & Bruggeman, A. & Choukr-Allah, R. & Karajeh, F., 2007. "Non-conventional water resources and opportunities for water augmentation to achieve food security in water scarce countries," Agricultural Water Management, Elsevier, Elsevier, vol. 87(1), pages 2-22, January.
  6. Hanjra, Munir A. & Qureshi, M. Ejaz, 2010. "Global water crisis and future food security in an era of climate change," Food Policy, Elsevier, Elsevier, vol. 35(5), pages 365-377, October.
  7. Reimer, Jeffrey J., 2012. "On the economics of virtual water trade," Ecological Economics, Elsevier, Elsevier, vol. 75(C), pages 135-139.
  8. Allouche, Jeremy, 2011. "The sustainability and resilience of global water and food systems: Political analysis of the interplay between security, resource scarcity, political systems and global trade," Food Policy, Elsevier, Elsevier, vol. 36(S1), pages S3-S8.
  9. de Fraiture, Charlotte & Wichelns, Dennis, 2010. "Satisfying future water demands for agriculture," Agricultural Water Management, Elsevier, Elsevier, vol. 97(4), pages 502-511, April.
  10. Roberto Roson & Dominique Van der Mensbrugghe, 2012. "Climate change and economic growth: impacts and interactions," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, Inderscience Enterprises Ltd, vol. 4(3), pages 270-285.
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