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Economy-wide implications of direct and indirect policy interventions in the water sector: lessons from recent work and future research needs (English)

Water is increasingly becoming a limiting factor for sustainable economic growth and development in many countries. Its allocation has significant impacts on overall economic efficiency, particularly with growing physical scarcity in certain regions. Greater water supply variability further increases vulnerability in affected regions. Water also has become a strategic resource involving conflicts among those who may be affected differently by various policies. This paper analyzes various policy interventions aimed at improving water allocation decisions, using a novel approach that incorporates macro and micro level considerations in a unified analytical framework. The framework facilitates assessment of various linkages among policies and their impacts within individual sectors and economy-wide. Drawing on country based studies in Morocco, South Africa, Turkey, and Mexico, the analysis reveals difficult tradeoffs among various policy objectives, including priorities placed on different sectors, regional advantages, and general economic efficiency gains versus broader social impacts. The comparison of policy impacts demonstrates the usefulness of the framework in information that policy makers can use to rank the policy interventions according to the emphasis placed on different policy objectives. The paper also compares approaches used in other studies that apply computable general equilibrium models in various contexts of water, environment and agriculture.


  • Author

    Dinar, Ariel

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  • Document Type

    Policy Research Working Paper

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    Southern Africa,



  • Region

    Middle East and North Africa, Africa, Europe and Central Asia, Latin America & Caribbean,

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  • Doc Name

    Economy-wide implications of direct and indirect policy interventions in the water sector: lessons from recent work and future research needs

  • Keywords

    water;marginal cost of water supply;social point of view;impact of climate change;Environment & Energy;computable general equilibrium model;marginal propensity to save;demand for irrigation water;annual renewable water resource;rural to urban migration;administration of water rights;simple general equilibrium model;marginal cost of supply;shadow price;Irrigated Agriculture;factor of production;water pricing reform;fruit and vegetable;marginal value product;water allocation decision;macroeconomic policy instrument;renewable fresh water;general equilibrium analysis;land and water;availability of water;urban water demand;transfer of water;social accounting matrix;privatization of state;formal water market;decline in agriculture;economies of scale;pasture and forage;Water and Land;legislation and regulation;labor employment;water pricing methods;direct income support;national water right;area under irrigation;farm water supply;water use efficiency;water user association;price of good;agricultural price policy;construction of dam;scarcity of water;farm output price;reduction of poverty;impact of water;basic human need;small holder farmer;foreign direct investment;management of water;availability of data;water resource allocation;total water supply;limits to growth;access to capital;export of crops;irrigation water allocation;improved water productivity;impact of policy;allocation of water;amount of water;development research group;development of water;policy for water;water management policy;water delivery costs;proximity to market;assessment of water;introduction of water;quantity of water;payment for water;water scarce country;effect of trade;crop and livestock;price of labor;incentive for farmer;inputs of production;rural household income;forms of protection;linear expenditure system;water pricing scheme;demand for water;urban water sector;partial equilibrium analysis;large scale irrigation;effects on wage;agricultural sector;



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Dinar, Ariel

Economy-wide implications of direct and indirect policy interventions in the water sector: lessons from recent work and future research needs (English). Policy Research working paper ; no. WPS 6068 Washington, DC: World Bank