6533b861fe1ef96bd12c5078
RESEARCH PRODUCT
The Impact of Trade Liberalisation on Water Use: A Computable General Equilibrium Analysis
Jian ZhangRichard S. J. TolKatrin RehdanzMaria Berrittellasubject
Consumption (economics)Computable general equilibriumComputable General Equilibrium Trade Liberalization Water Policy Water ScarcityFactors of productionInternational economicsjel:F13jel:D58Water scarcityCOMPUTABLE GENERAL EQUILIBRIUM TRADE LIBERALIZATION WELFARE EFFECTSSettore SECS-P/03 - Scienza Delle FinanzeFarm waterEconomicsProduction (economics)jel:Q25General Economics Econometrics and FinanceFree tradejel:Q17Water usedescription
Water is scarce in many countries. One instrument to improve the allocation of a scarce resource is (efficient) pricing or taxation. However, water is implicitly traded on international markets, particularly through food and textiles, so that impacts of water taxes cannot be studied in isolation, but require an analysis of international trade implications. We include water as a production factor in a multi-region, multi-sector computable general equilibrium model (GTAP), to assess a series of water tax policies. We find that water taxes reduce water use, and lead to shifts in production, consumption, and international trade patterns. Countries that do not levy water taxes are nonetheless affected by other countries’ taxes. Taxes on agricultural water use drive most of the economic and welfare impacts. Reductions in water use (welfare losses) are less (more) than linear in the price of water. The results are sensitive to the assumed ability to substitute other production factors for water. A water tax on production would have different effects on water use, production and trade patterns, and the size and distribution of welfare losses than would a water tax on final consumption.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2008-01-01 |