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The Impact of Trade Liberalization on Water Use: A Computable General Equilibrium Analysis

Author

Listed:
  • Rehdanz, Katrin

    () (University of Kiel)

  • Berrittella, Maria

    (University of Palermo)

  • S.J. Tol, Richard

    (Economic and Social Research Institute)

  • Zhang, Jian

    (University of Hawaii)

Abstract

We used the GTAP-W model - GTAP version 5 with water resources added - to estimate the impact of hypothetical Doha-like liberalization of agricultural trade on water use. Three conclusions emerge. First, the change in regional water use is less than 10 per cent relative to the baseline in 2010, even if agricultural tariffs are reduced by 75 per cent. Second, patterns are non-linear. Water use may go up for partial liberalization, and down for more complete liberalization. This is because different crops respond differently to tariff reductions, but also because trade and competition matter too. Third, trade liberalization tends to reduce water use in water scarce regions, and increase water use in water abundant regions, even though water markets do not exist in most countries.

Suggested Citation

  • Rehdanz, Katrin & Berrittella, Maria & S.J. Tol, Richard & Zhang, Jian, 2008. "The Impact of Trade Liberalization on Water Use: A Computable General Equilibrium Analysis," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 631-655.
  • Handle: RePEc:ris:integr:0448
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    References listed on IDEAS

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    5. 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.
    6. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2006. "Would Multilateral Trade Reform Benefit Sub-Saharan Africans?," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(4), pages 626-670, December.
    7. Maria Berrittella & Katrin Rehdanz & Richard S.J. Tol, 2006. "The Economic Impact of the South-North Water Transfer Project in China: A Computable General Equilibrium Analysis," Working Papers 2006.154, Fondazione Eni Enrico Mattei.
    8. Strzepek, Kenneth M. & Yohe, Gary W. & Tol, Richard S.J. & Rosegrant, Mark W., 2008. "The value of the high Aswan Dam to the Egyptian economy," Ecological Economics, Elsevier, vol. 66(1), pages 117-126, May.
    9. Kirkpatrick, Colin & George, Clive, 2004. "Trade and Development: Assessing the Impact of Trade Liberalisation on Sustainable Development," Impact Assessment Research Centre (IARC) Working Papers 30579, University of Manchester, Institute for Development Policy and Management (IDPM).
    10. 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;Western Regional Science Association, vol. 34(4), pages 473-487.
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    13. Anthony Letsoalo & James Blignaut & Theuns de Wet & Martin de Wit & Sebastiaan Hess & Richard S.J. Tol & Jan van Heerden, 2005. "Triple Dividends Of Water Consumption Charges In South Africa," Working Papers FNU-62, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2005.
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    Citations

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    Cited by:

    1. Roberto Ponce & Francesco Bosello & Carlo Giupponi, 2012. "Integrating Water Resources into Computable General Equilibrium Models - A Survey," Working Papers 2012.57, Fondazione Eni Enrico Mattei.
    2. Alvaro Calzadilla & Katrin Rehdanz & Richard S.J. Tol, 2008. "The Eonomic Impact Of More Sustainable Water Use In Agriculture: A Computable General Equilibrium Analysis," Working Papers FNU-169, Research unit Sustainability and Global Change, Hamburg University, revised Dec 2008.
    3. Dinar, Ariel, 2012. "Economy-wide implications of direct and indirect policy interventions in the water sector: lessons from recent work and future research needs," Policy Research Working Paper Series 6068, The World Bank.
    4. Alvaro Calzadilla & Katrin Rehdanz & Richard Betts & Pete Falloon & Andy Wiltshire & Richard Tol, 2013. "Climate change impacts on global agriculture," Climatic Change, Springer, vol. 120(1), pages 357-374, September.
    5. Alvaro Calzadilla & Katrin Rehdanz & Richard S.J. Tol, 2008. "Water Scarcity And The Impact Of Improved Irrigation Management: A Cge Analysis," Working Papers FNU-160, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2008.
    6. Sahlén, Linda, 2009. "Essays on Environmental and Development Economics - Public Policy, Resource Prices and Global Warming," Umeå Economic Studies 762, Umeå University, Department of Economics.
    7. Dritan Osmani, "undated". "A note on optimal transfer schemes, stable coalition for environmental protection and joint maximization assumption," Working Papers FNU-176, Research unit Sustainability and Global Change, Hamburg University.
    8. Bell, Andrew & Zhu, Tingju & Xie, Hua & Ringler, Claudia, 2014. "Climate–water interactions—Challenges for improved representation in integrated assessment models," Energy Economics, Elsevier, vol. 46(C), pages 510-521.
    9. Li Jiang & Feng Wu & Yu Liu & Xiangzheng Deng, 2014. "Modeling the Impacts of Urbanization and Industrial Transformation on Water Resources in China: An Integrated Hydro-Economic CGE Analysis," Sustainability, MDPI, Open Access Journal, vol. 6(11), pages 1-15, October.
    10. repec:spr:waterr:v:32:y:2018:i:3:d:10.1007_s11269-017-1847-7 is not listed on IDEAS
    11. Ouraich, Ismail & Tyner, Wallace E., 2014. "Climate change impacts on Moroccan agriculture and the whole economy: An analysis of the impacts of the Plan Maroc Vert in Morocco," WIDER Working Paper Series 083, World Institute for Development Economic Research (UNU-WIDER).
    12. Ouraich, Ismail & Tyner, Wallace E., 2011. "A CGE Analysis of Economy-wide Impacts of Climate Change on Agriculture in Morocco," 2011 Conference: Impacts of Climate Change on Agriculture, December 6-7, 2011, Rabat, Morocco 188121, Moroccan Association of Agricultural Economics (AMAEco).
    13. Roberto Ponce & Ramiro Parrado, 2015. "Climate Change, Water Scarcity on Agriculture and the Economy-Wide: impacts in the LAC Region," Serie Working Papers 16, Universidad del Desarrollo, School of Business and Economics.
    14. María Blanco & Benjamin Van Doorslaer & Wolfgang Britz & Heinz-Peter Witzke, 2012. "Exploring the feasibility of integrating water issues into the CAPRI model," JRC Working Papers JRC77058, Joint Research Centre (Seville site).
    15. Ouraich, Ismail & Tyner, Wallace E., 2014. "Morocco.s unique situation in the climate change arena: An analysis of climate forecasts and their link to agriculture," WIDER Working Paper Series 088, World Institute for Development Economic Research (UNU-WIDER).
    16. Jian Zhang & Denise Eby Konan, 2010. "The Sleeping Giant Awakes: Projecting Global Implications of China's Energy Consumption," Review of Development Economics, Wiley Blackwell, vol. 14(4), pages 750-767, November.

    More about this item

    Keywords

    computable general equilibrium; trade liberalization; water policy; water scarcity;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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