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Management of water resources sector to face climatic shocks in Algieria: A dynamic CGE model analysis

Management of water resources sector to face climatic shocks in Algieria: A dynamic CGE model... AbstractClimate change is a major global issue, which is becoming increasingly important on the international scene. As it has a direct impact on ecosystems and societies. Water is at the heart of these changes. The aim of this article was to capture all the microeconomic and macroeconomic effects of resource availability, and to propose a sequential dynamic computable general equilibrium (CGE) model that takes into account long-term changes in the availability of the primary resource (water supply) with regard to population growth (demand). The results show that the very negative effects on the economy of water shortages could be counteracted by the introduction of a marginal cost demand management policy. This makes it possible to better manage the scarcity of this resource. In fact, the model shows that when Algeria is facing water deficits, the marginal cost tariff policy reverses the trends of an economy that would maintain a tariff policy at average cost. Total investment increases, and total welfare deteriorates less. The drop in the price of water (input and final good), generated by the transition from an average cost pricing to a marginal cost pricing, generates an expansion of many sectors, and stimulates economic activity which reduces the rate of unemployment. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Environmental & Socio-economic Studies de Gruyter

Management of water resources sector to face climatic shocks in Algieria: A dynamic CGE model analysis

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References (16)

Publisher
de Gruyter
Copyright
© 2020 Mohammed Touitou et al., published by Sciendo
ISSN
2354-0079
eISSN
2354-0079
DOI
10.2478/environ-2020-0006
Publisher site
See Article on Publisher Site

Abstract

AbstractClimate change is a major global issue, which is becoming increasingly important on the international scene. As it has a direct impact on ecosystems and societies. Water is at the heart of these changes. The aim of this article was to capture all the microeconomic and macroeconomic effects of resource availability, and to propose a sequential dynamic computable general equilibrium (CGE) model that takes into account long-term changes in the availability of the primary resource (water supply) with regard to population growth (demand). The results show that the very negative effects on the economy of water shortages could be counteracted by the introduction of a marginal cost demand management policy. This makes it possible to better manage the scarcity of this resource. In fact, the model shows that when Algeria is facing water deficits, the marginal cost tariff policy reverses the trends of an economy that would maintain a tariff policy at average cost. Total investment increases, and total welfare deteriorates less. The drop in the price of water (input and final good), generated by the transition from an average cost pricing to a marginal cost pricing, generates an expansion of many sectors, and stimulates economic activity which reduces the rate of unemployment.

Journal

Environmental & Socio-economic Studies – de Gruyter

Published: Mar 1, 2020

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