Water scarcity is an increasing problem in many parts of the world and the management of water has become an important issue on the political economy agenda in many countries. As water is used in most economic activities and the allocation of water is often a complex problem involving different economic agents and sectors, Computable General Equilibrium (CGE) models have been proven useful to analyze water allocation problems, although their adaptation to include water is still relatively undeveloped. This paper provides a description of an integrated water-focused CGE model (STAGE_W) that includes multiple types and uses of water, and for the first time, the reclamation of wastewater as well as the provision of brackish groundwater as separate, independent activities with specific cost structures. The insights provided by the model are illustrated with an application to the Israeli water sector assuming that freshwater resources available to the economy are cut by 50%. We analyze how the Israeli economy copes with this shock if it reduces potable water supply compared with further investments in the desalination sector. The results demonstrate that the effects on the economy are slightly negative under both scenarios. Counter intuitively, the provision of additional potable water to the economy through desalination does not substantively reduce the negative outcomes. This is mainly due to the high costs of desalination, which are currently subsidized, with the distribution of the negative welfare effect over household groups dependent on how these subsidies are financed.

Organic agriculture (OA) is considered a strategy to make agriculture more sustainable. Bhutan has embraced the ambitious goal of becoming the world’s first 100% organic nation. By analysing recent on-farm data in Bhutan, we found organic crop yields on average to be 24% lower than conventional yields. Based on these yield gaps, we assess the effects of the 100% organic conversion policy by employing an economy-wide computable general equilibrium (CGE) model with detailed representation of Bhutan’s agricultural sector incorporating agroecological zones, crop nutrients, and field operations. Despite a low dependency on agrochemicals from the onset of this initiative, we find a considerable reduction in Bhutan’s GDP, substantial welfare losses, particularly for non-agricultural households, and adverse impacts on food security. The yield gap is the main driver for a strong decline in domestic agricultural production, which is largely compensated by increased food imports, resulting in a weakening of the country’s cereal self-sufficiency. Current organic by default farming practices in Bhutan are still underdeveloped and do not apply the systems approach of organic farming as defined in the IFOAM organic farming standards. This is reflected in the strong decline of nitrogen (N) availability to crops in our simulation and bears potential for increased yields in OA. Improvement of soil-fertility practices, e.g., the adoption of N-fixing crops, improved animal husbandry systems with increased provision of animal manure and access to markets with price premium for organic products could help to lower the economic cost of the large-scale conversion.

The Grand Ethiopian Renaissance Dam (GERD) is expected to double Ethiopia's electricity 14 generation and impact Nile flows to Sudan and Egypt. We analyze some potential economy-wide 15 impacts on Sudan of the -term operation using a computable general equilibrium model 16 and outputs from hydrologic, river system, and crop models. Results show that the expected increase 17 in hydropower generation and the possible expansion of irrigation-area in Sudan due to river flow 18 regulation by the GERD could increase Sudan's accumulated GDP by US$ 47-83 billion over 2020-2060. 19 Thereby, the choice of crops in new irrigation schemes is key to maximizing Sudan's macro-economic 20 benefits.

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World market prices of rice have been subject to large fluctuations in recent years. In mid 2008, prices reached levels never seen before. Vietnam is a major exporter of rice and rice is also the main staple food of the country. Given the importance of rice for domestic food security, the Vietnamese government is intervening in its international trade by limiting exports in order to insulate domestic consumers from price hikes in the world market. The effects of these policy interventions on price transmission from international to domestic markets were investigated in this study. We analyzed the marketing chain of rice in Vietnam, constructed a multivariate vector error correction model for markets across the country and included a policy parameter as well as an international reference price. We found reasonable cointegration of most markets analyzed and only a limited effect of the applied export policies: they suppressed the price in the main producing region, the Mekong Delta, but did not significantly affect the prices in the main deficit regions of North Vietnam. From a food security perspective, it is likely to be more efficient to implement food security programs and public safety nets that are directly targeted at the poor, rather than attempting to insulate the whole country from the world market.

For rural households in the north of Vietnam, maize cropping is the main source of income. In the face of the world market price increases of the recent past, we analyze the regional marketing chain of this commodity qualitatively and econometrically investigating to what extent smallholder farmers in developing countries are affected by international price movements. Vietnamese maize markets are found to be well integrated. Recent price hikes have fully transmitted along the regional supply chain so that farmers profited. Nevertheless, adverse factors such as increasing input prices have neutralized these benefits resulting in a decline in real income of smallholders.JEL classifications: O13, Q11, Q13