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The economic impacts of water supply restrictions due to climate and policy change: A transboundary river basin supply-side input-output analysis

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  • Eamen, Leila
  • Brouwer, Roy
  • Razavi, Saman

Abstract

Finding sustainable pathways to efficiently allocate limited available water resources among increasingly competing water uses has become crucial due to climate-change-induced water shortages and increasing water demand. This has led to an urgent need for the inclusion of economic principles, models, and methods in water resources management. Although several studies have developed macro-economic models to evaluate the economic impacts of alternative water allocation strategies, many if not most ignore the hydrological boundaries of transboundary river basins. Furthermore, of those using input-output (IO) models, only a handful have applied supply-side IO models. In this paper, we present one of the first attempts to develop an inter-regional, supply-side IO modelling framework for a multi-jurisdictional, transboundary river basin to assess the direct and indirect economic impacts of water supply restrictions due to climate and policy change. Applying this framework to the Saskatchewan River Basin in Canada encompassing three provinces, we investigate the economic impacts of two different water supply restriction scenarios on the entire river basin and its sub-basins individually. We find that in the face of climate-change-induced water shortage, economic losses can be reduced by almost 50% by adopting appropriate management practices, including prioritization of water allocation, using alternative water sources, and water re-use technologies.

Suggested Citation

  • Eamen, Leila & Brouwer, Roy & Razavi, Saman, 2020. "The economic impacts of water supply restrictions due to climate and policy change: A transboundary river basin supply-side input-output analysis," Ecological Economics, Elsevier, vol. 172(C).
    • Handle: RePEc:eee:ecolec:v:172:y:2020:i:c:s0921800919305592
    DOI: 10.1016/j.ecolecon.2019.106532
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    References listed on IDEAS

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    7. Ward, Frank A., 2023. "Innovations for the Water Resource Economics Curriculum: Training the Next Generation," Applied Economics Teaching Resources (AETR), Agricultural and Applied Economics Association, vol. 5(3), September.
    8. Chenjun Zhang & Rui Hua & Zhen Shi & Yung‐ho Chiu & Shijiong Qin & Xinrui Sun, 2021. "Study on water resources consumption and environmental pollution of China's provinces under different economic development levels," Natural Resources Forum, Blackwell Publishing, vol. 45(3), pages 305-325, August.
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