Growth, Water Resilience, and Sustainability: A DSGE Model Applied to South Africa

Chuan-Zhong Li () and Ranjula Bali Swain
Additional contact information
Chuan-Zhong Li: Department of Economics, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

No 2014:11, Working Paper Series from Uppsala University, Department of Economics

Abstract: In this paper, we analyze a dynamic stochastic general equilibrium model on how water resilience a¤acts economic growth and dynamic welfare with special reference to South Africa. While water may become a limiting factor for future development in general, as a drought prone and water poor country with rapid population growth, South Africa may face more serious challenges for sustainable development in the future. Using the model, we conduct numerical simulation for di¤erent parameter configurations with varying discount rate, climate change assumption, and the degree of uncertainty in future precipitation. We find that with sufficient capital accumulation, development can still be made sustainable despite of increased future water scarcity and decreased long-run sustianable welfare; While sto- chastic variation in precipitation has a negatively e¤ect on water resilience and the expected dynamic welfare, the effect is mitigated by persistence in the precipitation pattern. With heavier time discounting and lower capital formation, however, the current welfare may not be sustained.

Keywords: Water resilience; growth; dynamic Welfare; sustainability (search for similar items in EconPapers)
JEL-codes: D60 O40 O55 Q25 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2014-12-19
New Economics Papers: this item is included in nep-cmp, nep-dge and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://uu.diva-portal.org/smash/get/diva2:773531/FULLTEXT02.pdf (application/pdf)

Related works:
Journal Article: Growth, Water Resilience, and Sustainability: A DSGE Model Applied to South Africa (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:uunewp:2014_011

Access Statistics for this paper

More papers in Working Paper Series from Uppsala University, Department of Economics Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Ulrika Öjdeby ().