Browsing by Subject "Water pricing"

Now showing 1 - 3 of 3
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    An integrated computable general equilibrium model including multiple types and uses of water
    (2015) Luckmann, Jonas Jens; Grethe, Harald
    Water is a scarce resource in many regions of the world and competition for water is an increasing problem. To countervail this trend policies are needed regulating supply and demand for water. As water is used in many economic activities, water related management decisions usually have complex implications. Economic simulation models have been proven useful to ex-ante assess the consequences of policy changes. Specifically, Computable General Equilibrium (CGE) models are very suitable to analyze the consequences of water-related management decisions, as they consider the interlinkages between different sectors and economic agents within an economy. However, so far there is no CGE model which provides a holistic picture of the water sector including all aspects of provision, demand and management. Against this background, in this thesis a CGE model (STAGE_W) is developed which is especially focused on the water sector and provides a generic, integrated and flexible framework to incorporate various water sources from which several water activities produce water commodities of differing quality. These are consumed by other activities or by households. The applications presented in this thesis are to the best knowledge of the author the first CGE approaches to depict the recycling of wastewater and the provision of brackish groundwater as independent activities. Another novelty of the model is that it is capable to depict cascading water use. Furthermore, the inclusion of several water specific taxation instruments allows for a wide range of water policy simulations. To demonstrate the capabilities of the model, STAGE_W is applied to a Social Accounting Matrix for Israel. Based on this database several case studies are conducted which are presented in three scientific articles. Israel provides an ideal example as the country is strongly affected by water scarcity and is also among the world leaders regarding the development of new water sources and technologies. In the first article, a literature review on previously existing approaches of water depiction in CGE models is provided along with a detailed description of the specifics of STAGE_W. The model is applied to simulate a reduction of freshwater resources. The effects of this shock are analyzed with and without further increasing the desalination capacity. The results show that the economic effects are slightly negative under both scenarios. Counterintuitively, the provision of additional potable water through desalination does not substantively reduce the negative outcomes. This is mainly due to the high costs of desalination, which are currently subsidized in Israel. The second article simulates an abolishment of the discriminatory water pricing system currently established in Israel. Instead, two alternative schemes are introduced: price liberalization, which unifies the prices for all potable water consumers at cost recovery rates, and marginal pricing, lifting the potable water price to the cost of desalination. It is found that both schemes yield a double dividend by simultaneously saving water and increasing economic growth. Thereby, marginal pricing allows for larger water savings while price liberalization results in higher economic growth. In the third article, the model is further refined: the quantity of sewage available for reclamation is linked to the water consumption of economic entities connected to a sewer system. This allows to depict cascading water use and to endogenously estimate the marginal value of unpurified sewage. It is shown that a consideration of this link is crucial, if a high share of potable water is reclaimed and used. In this case, reducing the potable water consumption of municipalities also negatively affects the availability of reclaimed wastewater and thereby reduces its potential as a substitute for potable water. These case studies provide evidence of the validity of the model developed. The model results cannot necessarily be anticipated, as they are the outcome of complex interrelations within the model and none of the previous models has the capacity to capture all the relevant aspects of the water sector which influence these outcomes. Therefore, it is concluded that STAGE_W constitutes a helpful tool to implement a more sustainable management of water resources, allowing policy makers to ex-ante estimate the economy-wide effects of water related decisions. As the whole economy is depicted, a more holistic picture of effects resulting from changes in the water sector can be drawn in comparison to single sector models or cost-benefit analyzes.
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    Role of irrigation water pricing in sustainable water resources management along the Tarim river, Northwest China
    (2016) Mamitimin, Yusuyunjiang; Doluschitz, Reiner
    The main objectives of the study are to explore whether irrigation water pricing can lead to efficient water use in agriculture along the Tarim River. To understand land and water use development and driving forces along the Aksu-Tarim Basin, a workshop was conducted in Urumqi which is capital city of Xinjiang Uyghur Autonomous Region. Local experts from different research disciplines as well as relevant stakeholder participated in the workshop. Besides, data were collected and analyzed from preselected sources such as statistical yearbook and government’s official document. Research results embedded in the first article revealed that there was a huge land expansion and increase in water use for agriculture during the period from 1989 to 2011. The results also indicate that interaction of vast population growth, positive price development, agricultural profitability increase, government’s afforestation program (Grain for Green) and insufficient control of land expansion were the main driving forces for those developments. Farmers’ behavior towards the changes of irrigation water pricing is one of the important factor determining efficiency of water pricing to elicit water conservation and demand reduction. Therefore, a total of 257 farm household interviews were conducted, of which 128 served to find out farmers’ responses towards the changes of water pricing in different parts of Tarim River in July and August 2012. The results of statistical analyses are presented in the second article. Results show that only less than half of the interviewed farm households would react to increased water prices with proper changes of their farming practices leading to a more efficient water use. Results also show that increasing water prices encourage the farmers to shift their irrigation from surface water to groundwater which may result in further environmental problems. In the second article it is not possible to access the impact of different water price levels and changes in the water pricing practices because of its technicality and complexity. Besides, an irrigation water pricing reform needs to consider institutional aspects which are usually ignored in research on water pricing. Therefore, an innovative approach, Bayesian network modeling, was employed to find out the effects of different water price levels, changes in water pricing practices, and other agricultural policy options on the water use efficiency along the Tarim River. Results presented in the third article show no significant impact of water prices increased by 0-50% on water use efficiency. Solely an increase of 100% may have a relevant positive effect on water use efficiency. The model results also reveal that water pricing may provide a promising option to increase water use efficiency provided that volumetrically measuring systems, subsidies for water saving technologies, and technical support are available. The fourth article discusses the economics of cotton production and land use changes along the Tarim River from 1989 to 2009 using data from official statistical yearbooks. The results of a trend analysis indicate that the land area of cotton increased. In contrast, the area of other crops slightly decreased. Results of comparative advantage index of cotton production show that most farmers in the upper stream are more efficient in cotton production compared to farmers of the lower stream, whereas farmers in Xinjiang Production and Construction Corps are more efficient than farmers outside the Xinjiang Production and Construction Corps. The overall results of the study indicate that irrigation water pricing is not the best option to achieve an efficient water use in agriculture along the Tarim River. It requires additional adjustments and supportive agricultural policies such as the availability of volumetric measuring systems, subsidies for water-saving technologies, technological support for farmers, as well as a further institutional reform. Besides, special attention should be given to the protection of groundwater resources, especially when water prices increase. Furthermore, additional research is needed to examine the impacts of water pricing on farmers’ welfare, and the role of transferable water rights and water user associations in terms of an efficient water use along the Tarim River.
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    STAGE_W : an applied general equilibrium model with multiple types of water; technical documentation
    (2014) Luckmann, Jonas; McDonald, Scott
    This document provides a description of the STAGE_W computable general equilibrium (CGE) model, which is a development of the STAGE model and allows for the depiction of diverse water resources and qualities as well as the simulation of detailed water policy scenarios. The main extensions of STAGE_W are the integration of various water resources as factors, from which specific activities produce water commodities. These commodities are used as inputs in the production process of other activities or are consumed by households and other agents as final users. Thereby, the number and specification of water factors, activities and commodities are flexible and can be adjusted to the conditions of the country analyzed. Moreover the model allows for the substitution of water commodities by water consuming activities. Besides this, the addition of two water specific tax instruments, allows for various pricing schemes, including price differentiation according to water user. All other features of the STAGE model are carried over directly to STAGE_W.