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Marginal Cost Versus Average Cost Pricing with Climatic Shocks in Senegal: Dynamic Computable General Equilibrium Model Applied to Water

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  • Briand, Anne

Abstract

The model simulates on a 20-year horizon, a first phase of increase in the water resource availability taking into account the supply policies by the Senegalese government and a second phase with hydrologic deficits due to demand evolution (demographic growth). The results show that marginal cost water pricing (with a subsidy ensuring the survival of the water production sector) makes it possible in the long term to absorb the shock of the resource shortage, GDP, investment and welfare increase. Unemployment drops and the sectors of rain rice, market gardening and drinking water distribution grow. In contrast, the current policy of average cost pricing of water leads the long-term economy in a recession with an agricultural production decrease, a strong degradation of welfare and a rise of unemployment. This result questions the basic tariff (average cost) on which block water pricing is based in Senegal.

Suggested Citation

  • Briand, Anne, 2006. "Marginal Cost Versus Average Cost Pricing with Climatic Shocks in Senegal: Dynamic Computable General Equilibrium Model Applied to Water," Climate Change Modelling and Policy Working Papers 12028, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcc:12028
    DOI: 10.22004/ag.econ.12028
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    References listed on IDEAS

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    5. Nabil Annabi & Fatou Cissé & John Cockburn & Bernard Decaluwé, 2005. "Trade Liberalisation, Growth and Poverty in Senegal: a Dynamic Microsimulation CGE Model Analysis," Working Papers 2005-07, CEPII research center.
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    Cited by:

    1. Anne Briand, 2008. "Les tarifications au coût marginal versus coût moyen face à des chocs climatiques au Sénégal : un modèle dynamique d’équilibre général calculable appliqué à l’eau," Économie et Prévision, Programme National Persée, vol. 185(4), pages 103-122.
    2. Anne Briand, 2008. "Les Tarifications Au Coût Marginal Versus Coût Moyen Face À Des Chocs Climatiques Au Sénégal : Un Modèle Dynamique D'Équilibre Général Calculable Appliqué À L'Eau," Post-Print hal-02430398, HAL.
    3. Roseta-Palma, Catarina & Monteiro, Henrique, 2008. "Pricing for Scarcity," MPRA Paper 10384, University Library of Munich, Germany.
    4. Fuente, David, 2019. "The design and evaluation of water tariffs: A systematic review," Utilities Policy, Elsevier, vol. 61(C).

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