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Water, externality and strategic interdependence: a general equilibrium analysis

Author

Listed:
  • Terry Roe

    (Department of Applied Economics, University of Minnesota, USA)

  • Xinshen Diao

    (Department of Applied Economics, University of Minnesota, USA)

Abstract

In a region with shared water aquifers, the use of water by one country becomes an externality to another. A policy to subsidize water is shown to lead to both countries being made worse off. However, such policies tend to receive the support of special interests having water rights, and those in sectors such as agriculture that uses water relatively intensively. A unilateral water tax will reduce own country's GDP and rise GDP in the other country. Only when both countries impose a tax co-operatively, will GDP rise in both countries. Copyright © 2000 John Wiley & Sons, Ltd.

Suggested Citation

  • Terry Roe & Xinshen Diao, 2000. "Water, externality and strategic interdependence: a general equilibrium analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(2), pages 149-167.
    • Handle: RePEc:wly:jintdv:v:12:y:2000:i:2:p:149-167
    DOI: 10.1002/(SICI)1099-1328(200003)12:2<149::AID-JID559>3.0.CO;2-K
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    References listed on IDEAS

    as
    1. Berck, Peter & Lipow, Jonathan, 1994. "Real and ideal water rights: the prospects for water-rights reform in Israel, Gaza, and the West Bank," CUDARE Working Paper Series 0698R, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
    2. Berck, Peter & Lipow, Jonathan, 1994. "Real and ideal water rights: The prospects for water-rights reform in Israel, Gaza, and the West Bank," Resource and Energy Economics, Elsevier, vol. 16(4), pages 287-301, November.
    3. Berck, Peter & Lipow, Jonathan, 1994. "Real and ideal water rights: the prospects for water-rights reform in Israel, Gaza, and the West Bank," CUDARE Working Papers 43743, University of California, Berkeley, Department of Agricultural and Resource Economics.
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    Cited by:

    1. Jianshi Zhao & Zhongjing Wang & Daoxi Wang & Dangxian Wang, 2009. "Evaluation of Economic and Hydrologic Impacts of Unified Water Flow Regulation in the Yellow River Basin," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 23(7), pages 1387-1401, May.

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