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Water scarcity and local economic activity: Spatial spillovers and the role of irrigation

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  • Marbler, Alexander

Abstract

This paper explores the spatial spillover effects of water scarcity on local economic activity and examines the role of irrigation in modulating these effects. Utilizing a newly assembled global geospatial data set that combines information on seasonal water availability and economic activity measured by nighttime luminosity, I conduct a spatial econometric analysis at the granular level of 0.25°×0.25° grid cells worldwide. My results reveal that agricultural water scarcity in rainfed grid cells has negative spatial spillover effects on economic activity, extending up to 300 kilometers away. However, the presence of irrigation infrastructure effectively mitigates both the direct negative impacts and the negative spatial spillover effects of agricultural water scarcity on economic activity. These results suggest that the benefits of certain climate adaptation measures may not be confined locally, but are observable at a larger scale. This paper emphasizes the importance of considering spatial dynamics and irrigation in understanding the effects of water scarcity on economic activity, providing valuable insights for water resource management policies targeted at promoting climate-resilient development.

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  • Marbler, Alexander, 2024. "Water scarcity and local economic activity: Spatial spillovers and the role of irrigation," Journal of Environmental Economics and Management, Elsevier, vol. 124(C).
    • Handle: RePEc:eee:jeeman:v:124:y:2024:i:c:s0095069624000056
    DOI: 10.1016/j.jeem.2024.102931
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    Cited by:

    1. Bareille, François & Chakir, Raja & Regnacq, Charles, 2024. "Rainwater shocks and economic growth: The role of the water cycle partition," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    2. Xiaojun Yu & Russell Smyth & Yao Yao & Quanda Zhang, 2024. "Water stress and industrial firm productivity: Evidence from China," Monash Economics Working Papers 2024-20, Monash University, Department of Economics.

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    More about this item

    Keywords

    Water availability; Economic activity; Spatial spillovers; Irrigation; Agriculture;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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