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Global Warming Induced Water-Cycle Changes and Industrial Production – A Scenario Analysis for the Upper Danube River Basin

  • Christoph Jessberger


    (Ifo Institute, University of Munich)

  • Maximilian Sindram


    (Ifo Institute, University of Munich)

  • Markus Zimmer


    (Ifo Institute, University of Munich)

Using the environmental decision support system DANUBIA, we analyze the effects of climate change on industry and compare the effectiveness of different adaptation strategies. The observed area covers Germany and Austria up to 2025. Since themain effects of climate change in this region are expected to be caused by changes in the water-cycle, we place a special focus on the exemplary region of the upper Danube catchment area. Industry is the main regional user of water resources.Water is an essential production factor and is used in almost every production process of a manufactured good. We apply estimates of regional production functions, based on AFiD-panel micro-data for Germany, to calibrate regional industrial production and water usage within DANUBIA. Thus, we are able to simulate region-specific effects of climate change and the impact of social scenarios using an innovative model of the reciprocal influences of a huge network of interdisciplinary research areas. Simulation results show wide regional differences in production site reactions as well as between differing scenarios. Comparing scenarios of moderate and serious climate change, we are able to illustrate the severe environmental effects in some regions and to determine considerable economic effects on regional economic growth.

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Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.

Volume (Year): 231 (2011)
Issue (Month): 3 (June)
Pages: 415-439

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Handle: RePEc:jns:jbstat:v:231:y:2011:i:3:p:415-439
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  1. Cristina de Gispert, 2004. "The economic analysis of industrial water demand: a review," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 22(1), pages 15-30, February.
  2. Diane Dupont & Steven Renzetti, 2001. "The Role of Water in Manufacturing," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(4), pages 411-432, April.
  3. Arnaud Reynaud, 2003. "An Econometric Estimation of Industrial Water Demand in France," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(2), pages 213-232, June.
  4. Dachraoui, Kais & Harchaoui, Tarek, 2004. "Water Use, Shadow Prices and the Canadian Business Sector Productivity Performance," Economic Analysis (EA) Research Paper Series 2004026e, Statistics Canada, Analytical Studies Branch.
  5. Hans-Friedrich-Eckey & Reinhold Kosfeld & Matthias Türck, 2005. "Regionale Produktionsfunktionen mit Spillover-Effekten für Deutschland – Empirischer Befund und wirtschaftspolitische Implikationen," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 125(2), pages 239-267.
  6. Kim, H Youn, 1992. "The Translog Production Function and Variable Returns to Scale," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 546-52, August.
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