The complexity of the connexions within an economic system can only be reliably reflected in academic research if powerful methods are used. Researchers have used Structural Path Analysis (SPA) to capture not only the linkages within the production system but also the propagation of the effects into different channels of impacts.However, the SPA literature has restricted itself to showing the relations among sectors of production, while the connections between these sectors and final consumption have attracted little attention. In order to consider the complete set of channels involved, in this paper we propose a structural path method that endogenously incorporates not only sectors of production but also the final consumption of the economy. The empirical application comprises water usages, and analyses the dissemination of exogenous impacts into various channels of water consumption. The results show that the responsibility for water stress is imputed to different sectors and depends on the hypothesis used for the role played by final consumption in the model. This highlights the importance of consumers' decisions in the determination of ecological impacts.
This paper analyzes two of the main challenges facing agriculture in Europe: technological changes and the application of the principle of cost recovery to water services. Our study takes into account the economic, social, and ecological consequences associated with these measures. Specifically, we consider the effects of these two situations not only on water consumption, but also on environmental, social, and economic indicators. Our study also includes two institutional scenarios involving the possibility or impossibility of performing transactions in formal water markets. By using a computable general equilibrium (CGE) model for the economy of Catalonia, a region located in Northeastern Spain, our results suggest that institutions related with water markets matter in terms of the effects that agricultural policies cause on water resources. They also suggest that greater economic efficiency is not necessarily optimal if we consider social or environmental criteria.
Water scarcity is a long-standing problem in Catalonia, as there are significant differences in the spatial and temporal distribution of water throughout the territory. There has consequently been a debate for many years about whether the solution to water scarcity must be considered in terms of efficiency or equity, the role that the public sector must play and the role that market-based instruments should play in water management. The aim of this paper is to analyse the advantages and disadvantages associated with different policy instruments, from both a supply and a demand viewpoint, which can be applied to water management in Catalonia. For this purpose, we use a computable general equilibrium (CGE) model, in which we introduce an ecological sector that allows us to analyse the environmental and economic impact of the altemative policies simulated. The calibration of the exogenous variables of the CGE model is performed by using a social accounting matrix (SAM) for the Catalan economy with 2001 data. The results suggest that taking into account the principle of sustainability of the resource, the policy debate between supply and demand in water policies is obsolete and a new combination of policies is required to respect the different values associated with water.
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