Global Economic and Food Security Impacts of Demand-Driven Water Scarcity—Alternative Water Management Options for a Thirsty World

Abstract

Global freshwater demand will likely continue its expansion under current expectations of economic and population growth. Withdrawals in regions which are already water-scarce will impose further pressure on the renewable water resource base threatening the long-term availability of freshwater across the many economic activities dependent on this resource for various functions. This paper assesses the economy-wide implications of demand-driven water scarcity under a 'middle-of-the-road' socio-economic development pathway by considering the trade-offs between the macroeconomic and food security impacts. The study employs a global CGE model comprising an advanced level of detail regarding water uses across economic activities and which allows for a sector-specific endogenous adaptation to water scarcity. A sustainable withdrawal threshold is imposed in regions with extended river-basin overexploitation (India, South Asia, the Middle East, and Northern Africa) whilst different water management options are considered through four alternative allocation methods across users. The scale of macroeconomic effects is dependent on the relative size of sectors with low-water productivity, the amount of water uses in these sectors, and the flexibility of important water users to substitute away from water inputs in conditions of scarcity. The largest negative GDP deviations are obtained in scenarios with limited mobility to re-allocate water across users. A significant alleviation is obtained when demand patterns are shifted based on differences in water productivity, however, with a significant imposition on food security prospects.2 of 20 imbalances between demand and supply. The implications of disruptions to economic activities may be large-scale [4,5] and could affect all sectors and households either directly through a reduction in water availability due to increased competition among users or indirectly through a reduction in the supply of water-intensive commodities. As supply chains become increasingly integrated globally, the impacts could also be felt outside these regions through international trade.Regions which are currently capping withdrawals to avoid river-basin overexploitation generally do so by prioritising user groups based on historical patterns which are largely conducive to economic inefficiencies [6]. Although water trade is permitted both formally and informally [7] in many instances, the exchange of water withdrawal rights remains limited with restrictions stemming from government intervention and limited conveyance capacity. Therefore, while full water mobility across large geographical areas could be hindered by the involved costs related to conveyance infrastructure, institutions, and use rights transactions, water use efficiency could still be improved through the consideration of market-based allocation means.There are now many studies projecting the size of future demand in the face of socio-economic development [3,[8][9][10][11][12][13]. However, the measurement of the economy-wide impacts o...

Restrictive Effects of Water Scarcity on Urban Economic Development in the Beijing-Tianjin-Hebei City Region

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The Water Governance Reform Framework: Overview and Applications to Australia, Mexico, Tanzania, U.S.A and Vietnam

“…Using a Blue Water Sustainability Index (BIWSI), which measures the proportion of blue water use from non-sustainable water resources (including groundwater and uses that reduce environmental flows), Wada and Bierkens [3] estimate that currently some 30% of human water consumption (including groundwater) is non-sustainable in that it will result in either the degradation of surface water or depletion of groundwater resources. At a regional level, Nechifor and Winning [5] project that India social, economic and political settings, the IAD framework also provides a means of describing and linking resource systems, governance systems, resource units, users, interactions, outcomes and related ecosystems [23].…”