Welfare Effects of Water Variability in Agriculture. Insights from a Multimarket Model
Date
2015
Type:
Artículo
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Abstract
The purpose of this research is to assess the welfare effects of climate change on
the Chilean agricultural sector, with special focus on changes in water availability.
The productive impacts of climate change on the agricultural sector are well analyzed at
both a global and national level. There is, however, a lack of evidence about the aggregated
impacts, considering both demand and supply. This study tries to fill this gap by using a
multimarket model, specifically designed for the Chilean agricultural sector. According to
our results, changes in water availability will have modest welfare impacts, with an
average decrease of total surplus of 4.3%, minor price changes (around −1%), and no
significant impacts on total agricultural land. Despite the small aggregated effects, it is
expected that climate change will have uneven consequences across regions and activities.
For instance, even though the southern zone (zone 3) shows the smallest income changes
−14% (average), the impacts within the zone range from 1% to 52% decrease in agricultural
net income. This situation suggests large distributional consequences of climate change for
the Chilean agricultural sector.
Description
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Citation
Ponce, Roberto D., Blanco, María, Giupponi, Carlo. “Welfare Effects of Water Variability in Agriculture. Insights from a Multimarket Model.” Water 7 (2015): 2908-2923.
Keywords
Agricultural multimarket model, Climate change, Agriculture, Water resources, Uncertainty