How to promote the sustainable use of water: The Sao Marcos Basin Case Study

Flavio Menezes, Morganna W. Capodeferro, Juliana J. Smiderle and Pedro E. Guimarães
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Morganna W. Capodeferro: COPPE and FGV CERI
Juliana J. Smiderle: Poli/UFRJ and FGV CERI
Pedro E. Guimarães: EPGE and FGV CERI

No 624, Discussion Papers Series from University of Queensland, School of Economics

Abstract: The conflicting demands for water from irrigating perennial crops, generating power, and supplying humans and livestock have placed many river basins around the world under stress. These conflicts are being and will continue to be exacerbated by the impact of climate change. Here we expound a methodology, based on economic theory, that allows the estimation of the implicit value of the water for irrigation purposes. In turn, these implicit values can be employed to determine the amount to be charged for water to promote sustainable outcomes. The methodology is developed and applied in the context of Brazil’s Sao Marcos River Basin, where agriculture and hydroelectricity generation activities compete for the existing water resources. We show that current water charges would have to increase by over 270 times to reduce the water consumption in the basin to a sustainable level.

Date: 2020-06-06
New Economics Papers: this item is included in nep-agr and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:qld:uq2004:624

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