A multiregional input–output optimization model to assess impacts of water supply disruptions under climate change on the Great Lakes economy

Abstract

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Estimating the Total Economic Costs of Nutrient Emission Reduction Policies to Halt Eutrophication in the Great Lakes

“…An economic optimization model is developed that allocates TP emission reductions across sectors and lakes such that an imposed reduction target is achieved while minimizing the loss of value added or GDP (Garcia‐Hernandez & Brouwer, 2020) with respect to the baseline situation and satisfying a set of restrictions related to the intermediate consumption. The model is specified as follows: $$$\begin{array}{l}\underset{\boldsymbol{x}}{\text{Min}}{\left(\boldsymbol{x}-{\boldsymbol{x}}_{0}\right)}^{T}\mathbf{\Lambda }\,\left(\boldsymbol{x}-{\boldsymbol{x}}_{0}\right)\quad \hfill \end{array}$$$ …”

“…The inter‐regional inter‐industry trade flows within the province of Ontario are calculated using the FLQ method, whereas the inter‐regional final consumption trade flows are calculated using the distance‐decay consumption function. Both methods are presented in Garcia‐Hernandez and Brouwer (2020). As a final step, linear programming is used to ensure consistency between the Canada‐GLB MRIO and the original Canadian and provincial IO tables.…”

“…An economic optimization model is developed that allocates TP emission reductions across sectors and lakes such that an imposed reduction target is achieved while minimizing the loss of value added or GDP (Garcia-Hernandez & Brouwer, 2020) with respect to the baseline situation and satisfying a set of restrictions related to the intermediate consumption. The model is specified as follows:…”

“…Economic growth has led to serious degradation of water quality, in particular due to the emission of nutrients from urban and rural sources, resulting in increasing eutrophication and outbreaks of harmful algal blooms (HABs) (Carpenter, 2008; Cornwell et al., 2015; McKindles et al., 2020; Michalak et al., 2013; Watson et al., 2016), jeopardizing water security and compromising the long‐term sustainability of the social and economic activities in the GLB (Isely et al., 2018; Smith et al., 2019). In view of the fact that the economic activities in the GLB are highly interdependent and connected to other regions across the country and internationally (Garcia‐Hernandez & Brouwer, 2020), changes in one activity to reduce the emission of nutrients are expected to impact other activities inside and outside the GLB. In order to be able to better understand the interconnectivity of these various water‐dependent activities in the economy as a whole and assess the wider direct and indirect economic impacts of nutrient reduction policies, an appropriate multi‐regional macro‐economic modeling framework is required.…”

“…Environmental‐economic studies usually follow the administrative boundaries of countries or states (Garcia et al., 2020; Lenzen, 2009; Ruddell et al., 2014; Soligno et al., 2019), because this is the scale at which available data are presented. However, significant progress has been made using Geographical Information Systems (GIS) to spatially tailor these macro‐economic models to river basins and watersheds (Garcia‐Hernandez & Brouwer, 2020).…”