Simulating the Macroeconomic Impact of Future Water Scarcity: An Assessment of Alternative Scenarios

IEFE ‐ The Center for Research on Energy and Environmental, Bocconi, Working Paper No. 84

24 Pages Posted: 25 Feb 2016

See all articles by Roberto Roson

Roberto Roson

Ca Foscari University of Venice - Dipartimento di Economia; Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy; Loyola Andalucia University

Richard Damania

World Bank; University of Adelaide - School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 16, 2016

Abstract

In this paper we consider some of the economic implications of climate change scenarios as described in the Shared Socioeconomic Pathways (SSPs). By comparing potential water demand with estimates of (sustainable) water availability in different regions, we identify regions that are likely to be constrained in their future economic growth potential by the scarcity of water resources. We assess the macroeconomic impact of water scarcity under alternative allocation rules finding that, by assigning more water to sectors in which it has a higher value, shifting production to less water intensive sectors, and importing more water intensive goods, constrained regions can effectively neutralize these water related climate risks and adapt to a changing water environment. However, this adaptation effort is likely to imply some radical changes in water management policies.

Keywords: Water, Economic Growth, Shared Socio-economic Pathways, Computable General Equilibrium, Virtual Water Trade

JEL Classification: C68, F18, F43, O11, Q01, Q25, Q32, Q56

Suggested Citation

Roson, Roberto and Damania, Richard, Simulating the Macroeconomic Impact of Future Water Scarcity: An Assessment of Alternative Scenarios (February 16, 2016). IEFE ‐ The Center for Research on Energy and Environmental, Bocconi, Working Paper No. 84, Available at SSRN: https://ssrn.com/abstract=2737353 or http://dx.doi.org/10.2139/ssrn.2737353

Roberto Roson (Contact Author)

Ca Foscari University of Venice - Dipartimento di Economia ( email )

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HOME PAGE: http://venus.unive.it/roson

Bocconi University - IEFE Centre for Research on Energy and Environmental Economics and Policy ( email )

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Loyola Andalucia University ( email )

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Spain

Richard Damania

World Bank ( email )

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Washington, DC 20433
United States

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 4933 (Phone)
+61 8 8223 1460 (Fax)

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