Abstract. Agricultural production and food prices are affected by hydroclimatic extremes. There has been a growing amount of literature measuring the impacts of individual extreme events (heat stress or water stress) on agricultural and human systems. Yet, we lack a comprehensive understanding of the significance and the magnitude of the impacts of compound extremes. This study combines a fine-scale weather product with outputs of a hydrological model to construct functional metrics of individual and compound hydroclimatic extremes for agriculture. Then, a yield response function is estimated with individual and compound metrics, focusing on corn in the United States during the 1981–2015 period. Supported by statistical evidence, the findings suggest that metrics of compound hydroclimatic extremes are better predictors of corn yield variations than metrics of individual extremes. The results also confirm that wet heat is more damaging than dry heat for corn. This study shows the average yield damage from heat stress has been up to four times more severe when combined with water stress.

Water is an essential input in the production processes of all goods and services. However, most economic models ignore water as an essential factor of production. In contrast with other inputs, economic data do not reflect the role of water in the production processes of goods and services and its final value in the demand side. This makes it difficult to incorporate water in economic models, properly examine its role in economic activities, and study its interaction with other inputs in the production processes. Introducing water into an economy-wide database such as Global Trade Analysis Project (GTAP) Data Base which has been widely used by many economic modelers across the world could help them to extend their research agendas on the role and importance of water in economic activities. As the first step towards this direction we divided the crop sectors of the GTAP-Power Data

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1 This paper identifies two types of implicit and explicit energy subsidies in Iran as an oil-producing country. Using a computable general equilibrium model, we study the impacts of reducing implicit and explicit energy subsidies, which entails a huge increase in domestic energy prices. The model is based on a Modified Micro Consistent Matrix (prepared by the authors for the Ministry of Energy in Iran), which includes implicit subsidies and sector-specific capital. The model consists of 36 commodity goods and 18 production activities. Our findings suggest that, except for energy and services, overall economic activity declines and the consumer faces a lower level of welfare after subsidy reduction. Energy exports would increase and non-energy exports decline. Domestic energy demand by households and producers would decline as well. On the demand side, the results show a crowding out effect on public goods and services. 35 ServicesAn analysis of energy price reform: a CGE approach 43 OPEC Energy Review March 2012