IDEAS home Printed from https://ideas.repec.org/a/eee/jeeman/v124y2024ics0095069624000056.html

Water scarcity and local economic activity: Spatial spillovers and the role of irrigation

Author

Listed:
  • Marbler, Alexander

Abstract

This paper explores the spatial spillover effects of water scarcity on local economic activity and examines the role of irrigation in modulating these effects. Utilizing a newly assembled global geospatial data set that combines information on seasonal water availability and economic activity measured by nighttime luminosity, I conduct a spatial econometric analysis at the granular level of 0.25°×0.25° grid cells worldwide. My results reveal that agricultural water scarcity in rainfed grid cells has negative spatial spillover effects on economic activity, extending up to 300 kilometers away. However, the presence of irrigation infrastructure effectively mitigates both the direct negative impacts and the negative spatial spillover effects of agricultural water scarcity on economic activity. These results suggest that the benefits of certain climate adaptation measures may not be confined locally, but are observable at a larger scale. This paper emphasizes the importance of considering spatial dynamics and irrigation in understanding the effects of water scarcity on economic activity, providing valuable insights for water resource management policies targeted at promoting climate-resilient development.

Suggested Citation

  • Marbler, Alexander, 2024. "Water scarcity and local economic activity: Spatial spillovers and the role of irrigation," Journal of Environmental Economics and Management, Elsevier, vol. 124(C).
    • Handle: RePEc:eee:jeeman:v:124:y:2024:i:c:s0095069624000056
    DOI: 10.1016/j.jeem.2024.102931
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0095069624000056
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jeem.2024.102931?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Tamma Carleton & Amir Jina & Michael Delgado & Michael Greenstone & Trevor Houser & Solomon Hsiang & Andrew Hultgren & Robert E Kopp & Kelly E McCusker & Ishan Nath & James Rising & Ashwin Rode & Hee , 2022. "Valuing the Global Mortality Consequences of Climate Change Accounting for Adaptation Costs and Benefits [Distributive Politics and Economic Growth]," The Quarterly Journal of Economics, Oxford University Press, vol. 137(4), pages 2037-2105.
    2. Ashwin Rode & Tamma Carleton & Michael Delgado & Michael Greenstone & Trevor Houser & Solomon Hsiang & Andrew Hultgren & Amir Jina & Robert E. Kopp & Kelly E. McCusker & Ishan Nath & James Rising & Ji, 2021. "Author Correction: Estimating a social cost of carbon for global energy consumption," Nature, Nature, vol. 600(7889), pages 17-17, December.
    3. Allen, Richard G. & Pruitt, William O. & Wright, James L. & Howell, Terry A. & Ventura, Francesca & Snyder, Richard & Itenfisu, Daniel & Steduto, Pasquale & Berengena, Joaquin & Yrisarry, Javier Basel, 2006. "A recommendation on standardized surface resistance for hourly calculation of reference ETo by the FAO56 Penman-Monteith method," Agricultural Water Management, Elsevier, vol. 81(1-2), pages 1-22, March.
    4. Damania, R. & Desbureaux, S. & Zaveri, E., 2020. "Does rainfall matter for economic growth? Evidence from global sub-national data (1990–2014)," Journal of Environmental Economics and Management, Elsevier, vol. 102(C).
    5. Marshall Burke & Solomon M. Hsiang & Edward Miguel, 2015. "Global non-linear effect of temperature on economic production," Nature, Nature, vol. 527(7577), pages 235-239, November.
    6. Francis Annan & Wolfram Schlenker, 2015. "Federal Crop Insurance and the Disincentive to Adapt to Extreme Heat," American Economic Review, American Economic Association, vol. 105(5), pages 262-266, May.
    7. Maximilian Kotz & Leonie Wenz & Annika Stechemesser & Matthias Kalkuhl & Anders Levermann, 2021. "Day-to-day temperature variability reduces economic growth," Nature Climate Change, Nature, vol. 11(4), pages 319-325, April.
    8. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(2), pages 238-249, April.
    9. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    10. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366, Elsevier.
    11. Xiao-jun Wang & Jian-yun Zhang & Shamsuddin Shahid & En-hong Guan & Yong-xiang Wu & Juan Gao & Rui-min He, 2016. "Adaptation to climate change impacts on water demand," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 21(1), pages 81-99, January.
    12. Strobl, Eric & Strobl, Robert O., 2011. "The distributional impact of large dams: Evidence from cropland productivity in Africa," Journal of Development Economics, Elsevier, vol. 96(2), pages 432-450, November.
    13. Maximilian Kotz & Anders Levermann & Leonie Wenz, 2022. "The effect of rainfall changes on economic production," Nature, Nature, vol. 601(7892), pages 223-227, January.
    14. Eoin McGuirk & Marshall Burke, 2020. "The Economic Origins of Conflict in Africa," Journal of Political Economy, University of Chicago Press, vol. 128(10), pages 3940-3997.
    15. Steve Miller & Kenn Chua & Jay Coggins & Hamid Mohtadi, 2021. "Heat Waves, Climate Change, and Economic Output," Journal of the European Economic Association, European Economic Association, vol. 19(5), pages 2658-2694.
    16. Nicolas Gatti & Kathy Baylis & Benjamin Crost, 2021. "Can Irrigation Infrastructure Mitigate the Effect of Rainfall Shocks on Conflict? Evidence from Indonesia," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(1), pages 211-231, January.
    17. Russ, Jason, 2020. "Water runoff and economic activity: The impact of water supply shocks on growth," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).
    18. Théo Benonnier & Katrin Millock & Vis Taraz, 2022. "Long-term migration trends and rising temperatures: the role of irrigation," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 11(3), pages 307-330, July.
    19. Tatyana Deryugina & Solomon Hsiang, 2017. "The Marginal Product of Climate," NBER Working Papers 24072, National Bureau of Economic Research, Inc.
    20. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
    21. Richard Damania, 2020. "The economics of water scarcity and variability," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 36(1), pages 24-44.
    22. Mariaflavia Harari & Eliana La Ferrara, 2018. "Conflict, Climate, and Cells: A Disaggregated Analysis," The Review of Economics and Statistics, MIT Press, vol. 100(4), pages 594-608, October.
    23. Kalkuhl, Matthias & Wenz, Leonie, 2020. "The impact of climate conditions on economic production. Evidence from a global panel of regions," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    24. Burke, M. & Craxton, M. & Kolstad, C.D. & Onda, C. & Allcott, H. & Baker, E. & Barrage, L. & Carson, R. & Gillingham, K. & Graff-Zivin, J. & Greenstone, M. & Hallegatte, S. & Hanemann, W.M. & Heal, G., 2016. "Opportunities for advances in climate change economics," ISU General Staff Papers 3565, Iowa State University, Department of Economics.
    25. Manisha Shah & Bryce Millett Steinberg, 2017. "Drought of Opportunities: Contemporaneous and Long-Term Impacts of Rainfall Shocks on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 125(2), pages 527-561.
    26. Burke, M & Craxton, M & Kolstad, CD & Onda, C & Allcott, H & Baker, E & Barrage, L & Carson, R & Gillingham, K & Graf-Zivin, J & Greenstone, M & Hallegatte, S & Hanemann, WM & Heal, G & Hsiang, S & Jo, 2016. "Opportunities for advances in climate change economics," University of California at Santa Barbara, Recent Works in Economics qt4tc5d9pb, Department of Economics, UC Santa Barbara.
    27. Corral, Leonardo R. & Schling, Maja, 2017. "The impact of shoreline stabilization on economic growth in small island developing states," Journal of Environmental Economics and Management, Elsevier, vol. 86(C), pages 210-228.
    28. You, Liangzhi & Wood, Stanley & Wood-Sichra, Ulrike & Wu, Wenbin, 2014. "Generating global crop distribution maps: From census to grid," Agricultural Systems, Elsevier, vol. 127(C), pages 53-60.
    29. Solomon M. Hsiang, 2016. "Climate Econometrics," NBER Working Papers 22181, National Bureau of Economic Research, Inc.
    30. Marshall Burke & Erick Gong & Kelly Jones, 2015. "Income Shocks and HIV in Africa," Economic Journal, Royal Economic Society, vol. 125(585), pages 1157-1189, June.
    31. Dustin E. Garrick & Robert W. Hahn, 2021. "An Economic Perspective on Water Security," Review of Environmental Economics and Policy, University of Chicago Press, vol. 15(1), pages 45-66.
    32. Anna Bruederle & Roland Hodler, 2018. "Nighttime lights as a proxy for human development at the local level," PLOS ONE, Public Library of Science, vol. 13(9), pages 1-22, September.
    33. J Vernon Henderson & Tim Squires & Adam Storeygard & David Weil, 2018. "The Global Distribution of Economic Activity: Nature, History, and the Role of Trade1," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(1), pages 357-406.
    34. Nicolas Berman & Mathieu Couttenier & Raphael Soubeyran, 2021. "Fertile Ground for Conflict," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 82-127.
    35. Adam Storeygard, 2016. "Farther on down the Road: Transport Costs, Trade and Urban Growth in Sub-Saharan Africa," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(3), pages 1263-1295.
    36. Christopher D. Elvidge & Daniel Ziskin & Kimberly E. Baugh & Benjamin T. Tuttle & Tilottama Ghosh & Dee W. Pack & Edward H. Erwin & Mikhail Zhizhin, 2009. "A Fifteen Year Record of Global Natural Gas Flaring Derived from Satellite Data," Energies, MDPI, vol. 2(3), pages 1-28, August.
    37. Burke, Marshall & Hsiang, Solomon M & Miguel, Edward, 2015. "Global non-linear effect of temperature on economic production," Department of Economics, Working Paper Series qt3g72r0zv, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    38. Roland Hodler & Paul A. Raschky, 2014. "Regional Favoritism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 995-1033.
    39. Sharon Maccini & Dean Yang, 2009. "Under the Weather: Health, Schooling, and Economic Consequences of Early-Life Rainfall," American Economic Review, American Economic Association, vol. 99(3), pages 1006-1026, June.
    40. Goutam Konapala & Ashok K. Mishra & Yoshihide Wada & Michael E. Mann, 2020. "Climate change will affect global water availability through compounding changes in seasonal precipitation and evaporation," Nature Communications, Nature, vol. 11(1), pages 1-10, December.
    41. Ariel Ortiz-Bobea & Toby R. Ault & Carlos M. Carrillo & Robert G. Chambers & David B. Lobell, 2021. "Anthropogenic climate change has slowed global agricultural productivity growth," Nature Climate Change, Nature, vol. 11(4), pages 306-312, April.
    42. Solomon Hsiang, 2016. "Climate Econometrics," Annual Review of Resource Economics, Annual Reviews, vol. 8(1), pages 43-75, October.
    43. Henderson, J. Vernon & Storeygard, Adam & Deichmann, Uwe, 2017. "Has climate change driven urbanization in Africa?," Journal of Development Economics, Elsevier, vol. 124(C), pages 60-82.
    44. Charles D. Kolstad & Frances C. Moore, 2020. "Estimating the Economic Impacts of Climate Change Using Weather Observations," Review of Environmental Economics and Policy, University of Chicago Press, vol. 14(1), pages 1-24.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bareille, François & Chakir, Raja & Regnacq, Charles, 2024. "Rainwater shocks and economic growth: The role of the water cycle partition," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    2. Xiaojun Yu & Russell Smyth & Yao Yao & Quanda Zhang, 2024. "Water stress and industrial firm productivity: Evidence from China," Monash Economics Working Papers 2024-20, Monash University, Department of Economics.
    3. Yu, Zhijian, 2025. "Reluctant participants? Weather extremes and ESG inconsistencies," International Review of Financial Analysis, Elsevier, vol. 106(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bareille, François & Chakir, Raja & Regnacq, Charles, 2024. "Rainwater shocks and economic growth: The role of the water cycle partition," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    2. Linsenmeier, Manuel, 2023. "Temperature variability and long-run economic development," Journal of Environmental Economics and Management, Elsevier, vol. 121(C).
    3. Tarsia, Romano, 2024. "Heterogeneous effects of weather shocks on firm economic performance," LSE Research Online Documents on Economics 124251, London School of Economics and Political Science, LSE Library.
    4. repec:osf:socarx:xvucn_v1 is not listed on IDEAS
    5. Zappalà, Guglielmo, 2024. "Adapting to climate change accounting for individual beliefs," Journal of Development Economics, Elsevier, vol. 169(C).
    6. Clément Nedoncelle & Julien Wolfersberger, 2025. "Weather shocks and firm exports in developing countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 161(2), pages 743-784, May.
    7. Chang, Jun-Jie & Mi, Zhifu & Wei, Yi-Ming, 2023. "Temperature and GDP: A review of climate econometrics analysis," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 383-392.
    8. Figari, Sebastián, 2025. "Climate change response: Input adjustment in agriculture," Journal of Development Economics, Elsevier, vol. 175(C).
    9. Aatishya Mohanty & Nattavudh Powdthavee & Cheng Keat Tang & Andrew J. Oswald, 2024. "Temperature Variability and Natural Disasters," Papers 2409.14936, arXiv.org.
    10. Marco Gortan & Lorenzo Testa & Giorgio Fagiolo & Francesco Lamperti, 2023. "A unified repository for pre-processed climate data weighted by gridded economic activity," Papers 2312.05971, arXiv.org.
    11. Sarun Kamolthip, 2025. "Daily Fluctuations in Weather and Economic Growth at the Subnational Level: Evidence from Thailand," Papers 2506.20105, arXiv.org, revised Jun 2025.
    12. Hajdu, Tamás, 2024. "Temperature exposure and sleep duration: Evidence from time use surveys," Economics & Human Biology, Elsevier, vol. 54(C).
    13. Tol, Richard S.J., 2024. "A meta-analysis of the total economic impact of climate change," Energy Policy, Elsevier, vol. 185(C).
    14. Desbordes, Rodolphe & Eberhardt, Markus, 2024. "Climate change and economic prosperity: Evidence from a flexible damage function," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    15. Elizabeth Kopits & Daniel Kraynak & Bryan Parthum & Lisa Rennels & David Smith & Elizabeth Spink & Joseph Perla & Nshan Burns, 2025. "Economic Impacts of Climate Change in the United States: Integrating and Harmonizing Evidence from Recent Studies," Papers 2509.00212, arXiv.org.
    16. Olper, Alessandro & Maugeri, Maurizio & Manara, Veronica & Raimondi, Valentina, 2021. "Weather, climate and economic outcomes: Evidence from Italy," Ecological Economics, Elsevier, vol. 189(C).
    17. Sarun Kamolthip, 2025. "Weather Fluctuations and Economic Growth at Subnational Level: Evidence from Thailand," PIER Discussion Papers 235, Puey Ungphakorn Institute for Economic Research.
    18. Mérel, Pierre & Paroissien, Emmanuel & Gammans, Matthew, 2024. "Sufficient statistics for climate change counterfactuals," Journal of Environmental Economics and Management, Elsevier, vol. 124(C).
    19. Emediegwu, Lotanna E. & Wossink, Ada & Hall, Alastair, 2022. "The impacts of climate change on agriculture in sub-Saharan Africa: A spatial panel data approach," World Development, Elsevier, vol. 158(C).
    20. Desbureaux, Sébastien & Rodella, Aude-Sophie, 2019. "Drought in the city: The economic impact of water scarcity in Latin American metropolitan areas," World Development, Elsevier, vol. 114(C), pages 13-27.
    21. Lianxiao Yao & Minghui Jin, 2025. "The uneven impact of temperature on the macroeconomy: a perspective on total factor productivity," Economic Change and Restructuring, Springer, vol. 58(4), pages 1-35, August.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeeman:v:124:y:2024:i:c:s0095069624000056. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622870 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.