How Water Flows Through CGE Models: A Systematic Review

Water-related challenges, including scarcity, drought, climate change, and the policies designed to address them, increasingly require integrated analytical approaches capable of capturing economy-wide impacts and policy interactions. Water computable general equilibrium (WCGE) models are widely applied for this purpose, linking water resources with macroeconomic systems. This systematic literature review examines the research scope, spatial and temporal characteristics, modelling approaches, and representations of water within production functions in WCGE studies. To analyse the wide range of modelling choices, a taxonomy and catalogue of production tree specifications are developed. The results reveal a highly diverse and increasingly interdisciplinary field, with growing applications in climate change, energy, agriculture, and Water–Energy–Food–Ecosystem (WEFE) nexus research. The representation of water as a production factor exhibits substantial flexibility and variation across studies, reflecting the adaptation of model structures to different research questions and policy contexts. Advancing WCGE research will require greater transparency, comparability, and methodological consistency to strengthen its contribution to policy analysis and support sustainable water governance and resource management.