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Effects of Water Scarcity on Peru’s Long-Term Growth Potential: A General Equilibrium Model-Based Quantitative Assessment

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  • Jean-Marc Montaud

    (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique)

  • Nicolas Pécastaing

Abstract

This analysis quantifies the impact of water scarcity on Peru's long-term growth potential using a CGE model that explicitly represents water as a production factor for selected activities and incorporates mobility constraints on its allocation across sectors. The model is calibrated on a Social Accounting Matrix (SAM) of the Peruvian economy that has been specifically extended with water-related features and is used to simulate projected climate change-induced water availability for 2050 in the Pacific coastal region, which constitutes the economic core of the country and the area most exposed to water stress. The results highlight the economic and welfare costs associated with increasing water scarcity, as well as its differentiated impacts across sectors, thereby underscoring both the degree of flexibility of the Peruvian economic system in responding to water scarcity and the need for effective water management strategies.

Suggested Citation

  • Jean-Marc Montaud & Nicolas Pécastaing, 2026. "Effects of Water Scarcity on Peru’s Long-Term Growth Potential: A General Equilibrium Model-Based Quantitative Assessment," Working Papers hal-05662171, HAL.
    • Handle: RePEc:hal:wpaper:hal-05662171
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