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An interregional Input-Output model with spatiotemporal hydrological variability. The case of Tuscany

Gino Sturla and Benedetto Rocchi

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: The work of Rocchi and Sturla (2021) presents an analysis of the pressure of the economic system on water resources in Tuscany at the regional level; in a following development Sturla and Rocchi (2022) incorporate temporal the hydrological variability to the regional model, with endogenous effects on agricultural and water for dilution demand. In this study, spatiotemporal variability is incorporated through i) a spatial disaggregation of the economic system based on an interregional input-output model (IRIO model) of Tuscan economy, ii) a spatial disaggregation of the hydrological components based on subregional data, and iii) a spatiotemporal model for the hydrological components based on a spatial stochastic model of precipitation. The spatial analysis scale corresponds to the Local Labor System (LLS), groups of contiguous municipalities classified based on economic criteria. Using the model developed, it is estimated the extended water exploitation index (EWEI), considering the extended demand (ED) and the feasible supply (FS) of water for each LLS; 100 hydrological years are simulated using a Montecarlo procedure. A novel endogenous scarcity threshold (ST) is proposed based on the results of the model and the intra-annual economic and hydrological characteristics of each LLS. With the EWEI and the ST, the hydro-economic equilibrium (HEE) for average hydrological conditions is characterised and the opportunity cost of the HEE is estimated. The latter corresponds to the minimum reduction of regional gross output compatible with the existence HEE in all LLS. Finally, the analysis is replicated considering a hydrology scenario under climate change.

Keywords: interregional input-output; hydrological variability; local economies; water stress; hydro-economic equilibrium; climate change. (search for similar items in EconPapers)
JEL-codes: C67 Q25 Q50 (search for similar items in EconPapers)
Pages: 75 pages
Date: 2022
New Economics Papers: this item is included in nep-agr, nep-env and nep-ure
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