Modelling Global Water

Richard Damania and Pasquale Lucio Scandizzo
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Richard Damania: World Bank
Pasquale Lucio Scandizzo: University of Rome “Tor Vergata”

No 21, Working Papers from SITES

Abstract:

This paper examines the economic implications of evolving water availability with a twofold objective. Firstly, it provides an overview of the problem of economic modelling of water in a general equilibrium context. To this aim, it presents both a general discussion of key issues and a review of CGE models that have attempted to deal with water as a key economic input and its direct and indirect influence on markets and well-being. Secondly, it addresses a crucial gap in the research work to date, by developing and implementing a global CGE model that incorporates the economic impacts of both precipitation and total water storage (TWS) – an aggregate measure encompassing soil moisture, surface water, and groundwater. By integrating these key variables, alongside a detailed representation of how water enters in the different value chains, the model provides novel suggestions and a better understanding of how water availability influences economic activity across sectors. Simulation results from the model are then used to provide insights into the question of the “cost of inaction”, that is the failure to engage in proactive economic policies under various water-related scenarios, including those driven by climate change.

Date: 2025-01
New Economics Papers: this item is included in nep-agr, nep-env and nep-int
Note: SITES Working Papers 21
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Persistent link: https://EconPapers.repec.org/RePEc:awm:wpaper:21

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