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Water Price and Water Relocation in Andalusia. A Computable General Equilibrium Approach

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  • Esther Velázquez
  • M. Alejandro Cardenete
  • Geoffrey J.D. Hewings

Abstract

The objective of this work is to analyze the effects that an increase in the price of the water delivered to the agriculture sector to promote the conservation of this resource would have on the efficiency of the consumption of water and the possible reallocation of water to the remaining productive sectors. The analysis is motivated by the fact that the agriculture consumes a disproportionately large amount of water at very low prices. The methodology that will be used to explore the implications on the economy will be a computable general equilibrium model (CGE), previously designed for an analysis of the direct taxes of the Andalusian economy (Cardenete and Sancho, 2003), but now enhanced and extended to include emissions of pollutants and the introduction of environmental taxes (André, Cardenete and Velázquez, 2005). This model has been further modified to introduce the variations in the water price that we will try to analyze by means of a tariff applied on the production structure. The main conclusion drawn indicates that, although the tax policy applied does not correspond to a significant water saving in the above-mentioned sector, a reallocation of this resource is achieved which seems to generate a more efficient and more rational behavior from a production point of view.
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  • Esther Velázquez & M. Alejandro Cardenete & Geoffrey J.D. Hewings, 2000. "Water Price and Water Relocation in Andalusia. A Computable General Equilibrium Approach," Regional and Urban Modeling 283600101, EcoMod.
    • Handle: RePEc:ekd:002836:283600101
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    References listed on IDEAS

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    1. Manuel Alejandro Cardenete & Ferran Sancho, 2006. "An Applied General Equilibrium Model to Assess the Impact of National Tax Changes on a Regional Economy," World Scientific Book Chapters, in: Masayuki Doi (ed.), Computable General Equilibrium Approaches In Urban And Regional Policy Studies, chapter 4, pages 41-55, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. Na Li & Xiaojun Wang & Minjun Shi & Hong Yang, 2015. "Economic Impacts of Total Water Use Control in the Heihe River Basin in Northwestern China—An Integrated CGE-BEM Modeling Approach," Sustainability, MDPI, vol. 7(3), pages 1-19, March.
    2. 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.
    3. Cámara Sánchez, Ángeles & Cardenete Flores, M.Alejandro & Monrobel Alcántara, José Ramón, 2014. "Matrices de Contabilidad Social y Modelos de Equilibrio General Aplicado elaborados en España a nivel regional/Social Accounting Matrices and Applied General Equilibrium Models Developed in Spain at R," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 32, pages 427-454, Enero.
    4. Cakmak, Erol H. & Dudu, Hasan & Saracoglu, Sirin & Diao, Xinshen & Roe, Terry & Tsur, Yacov, 2008. "Macro-Micro Feedback Links Of Irrigation Water Management In Turkey," Policy Research Working Paper Series 4781, The World Bank.
    5. Rashid Hassan & James Thurlow, 2011. "Macro–micro feedback links of water management in South Africa: CGE analyses of selected policy regimes," Agricultural Economics, International Association of Agricultural Economists, vol. 42(2), pages 235-247, March.
    6. Dale T. Manning & J. Edward Taylor & James E. Wilen, 2018. "General Equilibrium Tragedy of the Commons," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(1), pages 75-101, January.

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    More about this item

    JEL classification:

    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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