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Economic impacts of regional water scarcity in the São Francisco River Basin, Brazil: an application of a linked hydro-economic model

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  • Torres, Marcelo de O.
  • Maneta, Marco
  • Howitt, Richard
  • Vosti, Stephen A.
  • Wallender, Wesley W.
  • Bassoi, Luís H.
  • Rodrigues, Lineu N.

Abstract

This paper presents a linked hydro-economic model and uses it to examine the regional effects of water use regulations and product price changes on the agriculture of the São Francisco River Basin, Brazil. The effects of weather on surface water availability are explicitly addressed using the hydrological model MIKE-Basin. Farmers’ adjustments to changes in precipitation, surface water availability, and other factors are quantified using an economic model based on non-linear programming techniques. The models are externally linked. Results show that regional impacts, at the sub-basin level, vary depending on the location of each sub-basin relative to river flows. The effects of water use regulations and of exogenous price shocks on agriculture depend on weather, location, product mix and production technology. Implications of these results for policies designed to manage agriculture and water use are discussed.

Suggested Citation

  • Torres, Marcelo de O. & Maneta, Marco & Howitt, Richard & Vosti, Stephen A. & Wallender, Wesley W. & Bassoi, Luís H. & Rodrigues, Lineu N., 2012. "Economic impacts of regional water scarcity in the São Francisco River Basin, Brazil: an application of a linked hydro-economic model," Environment and Development Economics, Cambridge University Press, vol. 17(02), pages 227-248, April.
  • Handle: RePEc:cup:endeec:v:17:y:2012:i:02:p:227-248_00
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    Cited by:

    1. Francisco Fernández & Roberto Ponce & Maria Blanco & Diego Rivera & Felipe Vásquez, 2016. "Water Variability and the Economic Impacts on Small-Scale Farmers. A Farm Risk-Based Integrated Modelling Approach," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 30(4), pages 1357-1373, March.

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