The impact of water scarcity on food, bioenergy and deforestation

Abstract

We evaluate the impact of explicitly representing irrigated land and water scarcity in an economy-wide model with and without a global carbon policy. The analysis develops supply functions of irrigable land from a water resource model for 282 river basins and applies them within a global economy-wide model. The analysis reveals two key findings. First, explicitly representing irrigated land has a small impact on global food, bioenergy and deforestation outcomes. This is because this modification allows irrigated and rainfed land to expand in different proportions, which counters the effect of rising marginal costs for the expansion of irrigated land. Second, changes in water availability have small impacts on global food prices, bioenergy production, land use change and the overall economy, even with large-scale (c. 150 exajoules) bioenergy production, due in part to endogenous irrigation and storage responses. However, representing water scarcity and changes in water availability can be important regionally, with relatively arid areas and/or areas with rapidly growing populations fully exhausting our estimated maximum irrigation capacity that allows for improved irrigation efficiency, lining of canals to limit water loss, and expanding storage to fully capture average annual water flows.

New Data for Representing Irrigated Agriculture in Economy-Wide Models

“…Source: Authors' calculations. Winchester et al (2018) include supply curves for additional irrigable land in the Economic Projection and Policy Analysis (EPPA) model, an economy-wide model that represents 16 global regions (Chen et al, 2017). For modeling tractability, they define irrigation response units (IRUs) as groups of water regions with similar crop yields within an EPPA region.…”

“…Using the IRU-level irrigable land supply elasticities, Winchester et al (2018) augment the EPPA model to allow additional irrigated land to be produced by combining rainfed land with capital representing investment in irrigation infrastructure. In their model, crop land can be expanded by converting land from other agricultural uses and also the conversion of non-managed land to agricultural uses.…”

“…Winchester et al (2018) calculate land rental costs in each region by dividing total rental payments to crop land by the number of hectares in crop production estimated by Portmann et al (2010). For the first additional hectare of irrigated land in each IRU, annual rental payments to irrigation infrastructure (capital) equal the annualized cost of the first (least-cost) irrigation upgrade option.…”

Back to the Future: A 25-year Retrospective on GTAP and the Shaping of a New Agenda

“…More recently the GTAP group has included more direct links to disaggregated land and water by river basin and added separate production functions for irrigated and rainfed crops (Taheripour, Hertel, and Liu (2013a), Taheripour, Hertel, and Liu (2013b), and Liu et al (2014)). Some recent work has attempted to create "irrigable land supply functions to augment the AGE framework, utilizing more resolved data from a global water resource model (Winchester et al (2016) and Ledvina et al (2017)). But there remain issues of how to represent readily competing uses of water within the economic model.…”

“…Possibilities to provide more water (through expansion of reservoirs or improvements in efficiency of water use or conveyance) are not well described. Winchester et al (2016) and Ledvina et al (2017) incorporate these indirectly in the irrigable land supply functions, but then there is no direct economic trade off in the economic model. Moving from data to modeling, the multiple uses and timing of water supply over the year, and the public provision and pricing provide a set of challenges.…”