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Economic impacts of regional water scarcity in the São Francisco River Basin, Brazil: an application of a linked hydro-economic model

Published online by Cambridge University Press:  08 November 2011

Marcelo de O. Torres
Affiliation:
Department of Economics, University of Brasília, Secretaria da Coordenação de Pós-Graduação em Economia, Campus Darcy Ribeiro, Caixa Postal 4302, 70910-900, Brasília-DF, Brazil. Tel. 55-61-8469-0145. Email: motorres@hotmail.com.br
Marco Maneta
Affiliation:
Geosciences Department, University of Montana, USA. Email: Marco.Maneta@mso.umt.edu
Richard Howitt
Affiliation:
Department of Agricultural and Resource Economics, University of California, Davis, USA. Email: howitt@primal.ucdavis.edu
Stephen A. Vosti
Affiliation:
Department of Agricultural and Resource Economics, University of California, Davis, USA. Email: vosti@primal.ucdavis.edu
Wesley W. Wallender
Affiliation:
Department of Land, Air and Water Resources, University of California, Davis, USA. Email: wwwallender@ucdavis.edu
Luís H. Bassoi
Affiliation:
Embrapa, Semi-Arid Tropics Research Station, Petrolina, Brazil. Email: lhbassoi@cpatsa.embrapa.br
Lineu N. Rodrigues
Affiliation:
Embrapa, Savannah Research Station, Brasilia, Brazil. Email: lineu@cpac.embrapa.br

Abstract

This paper presents a linked hydro-economic model and uses it to examine the regional effects of water use regulations and product price changes on the agriculture of the São Francisco River Basin, Brazil. The effects of weather on surface water availability are explicitly addressed using the hydrological model MIKE-Basin. Farmers’ adjustments to changes in precipitation, surface water availability, and other factors are quantified using an economic model based on non-linear programming techniques. The models are externally linked. Results show that regional impacts, at the sub-basin level, vary depending on the location of each sub-basin relative to river flows. The effects of water use regulations and of exogenous price shocks on agriculture depend on weather, location, product mix and production technology. Implications of these results for policies designed to manage agriculture and water use are discussed.

Type
Research Article
Copyright
Copyright © Cambridge University Press 2011

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