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Climate Change and Texas Water Planning: an Economic Analysis of Inter-basin Water Transfers


  • Cai, Yongxia
  • McCarl, Bruce A.


Panel models with random effects are used to estimate how climate influences in-stream surface water supply, municipal water demand, crop yields and irrigation water use. The results are added into TEXRIVERSIM, a state wide economic, hydrological, environmental and inter-basin water transfer (IBTs) investment model, through the objective function and hydrological constraints. A climate change related scenario analysis from the Global Circulation Models (GCMs)--Hadley, Canadian, BCCR and NCAR with SRES scenarios A1B, B1, and A2 indicates that inter-basin water transfers not only greatly relax water scarcity problems for major cities and industrial counties, but also create growth opportunity for Houston. However, while destination basins receive the benefits, source basins will experience dramatic reduction in in-stream flow and water flows to bays and estuaries. Climate change requires accelerated water development with more IBTs proving economically feasible depending on the GCMs and SRES scenarios.

Suggested Citation

  • Cai, Yongxia & McCarl, Bruce A., 2009. "Climate Change and Texas Water Planning: an Economic Analysis of Inter-basin Water Transfers," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49933, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea09:49933

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    References listed on IDEAS

    1. Rosegrant, M.W. & Ringler, C. & McKinney, Daene C. & Cai, X. & Keller, Andrew & Donoso, G., 2000. "Integrated economic-hydrologic water modeling at the basin scale: the Maipo river basin," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 24(1), December.
    2. Keplinger, Keith O. & McCarl, Bruce A. & Chowdhury, Manzoor E. & Lacewell, Ronald D., 1998. "Economic And Hydrologic Implications Of Suspending Irrigation In Dry Years," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(01), July.
    3. Olivier DeschĂȘnes & Michael Greenstone, 2007. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather," American Economic Review, American Economic Association, vol. 97(1), pages 354-385, March.
    4. Bruce A. McCarl & Xavier Villavicencio & Ximing Wu, 2008. "Climate Change and Future Analysis: Is Stationarity Dying?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(5), pages 1241-1247.
    5. Wolfram Schlenker & Michael J. Roberts, 2008. "Estimating the Impact of Climate Change on Crop Yields: The Importance of Nonlinear Temperature Effects," NBER Working Papers 13799, National Bureau of Economic Research, Inc.
    6. Griffin, Ronald C. & Chang, Chan, 1991. "Seasonality In Community Water Demand," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(02), December.
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    More about this item


    Climate Change; Inter-basin Water Transfers; Water Scarcity; Environmental Stream Flows; Environmental Economics and Policy; Q25; Q54; Q58;

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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