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Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
Modeling Economy-wide impacts of water policies in pakistan
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Modeling Economy-wide impacts of water policies in pakistan

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Presented by Sherman Robinson at the Global Water Systems Project: Water in the Anthropocene Conference May 21-24th in Bonn, Germany.

Presented by Sherman Robinson at the Global Water Systems Project: Water in the Anthropocene Conference May 21-24th in Bonn, Germany.

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  • The left image is a picture from space of the lowest three quarters of Pakistan. It makes clear that Pakistan is a desert country irrigated by one river system. Western Punjab receives up to 500mm of rain a year (during the monsoon) while Eastern Pakistan receives barely 100mm.The Indus Basin Irrigation System (IBIS), whose command area is pictured on the right is the world largest contiguous irrigation system. The IBIS serves 45 million acres of farm land which produces wheat, rice, fruits, vegetables, sugarcane, maize and cotton. It is mostly serving the provinces of Punjab, upstream, and Sindh, downstream, with a some water diverted to Eastern Balochistan and NWFP.
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    • 1. Modeling Economywide Impactsof Water Policies in PakistanSherman Robinson and Arthur GueneauInternational Food Policy Research Institute (IFPRI)May 23, 2013 – GWSP Conference,Bonn, Germany
    • 2. Plan of the Presentation• Motivation of the work• Presentation of the CGE-W model– CGE model: IFPRI standard model– Water model: RWSM– Links: CGE-W• Results– Impact of climate change– Impact of Diamer-Basha dam• Future work and conclusion2
    • 3. Motivation• Pakistan is subject to increasing water stress– Expanding agriculture relies heavily on irrigation– Hydropower important for increased energy demand– Groundwater mining is pervasive– Climate change is likely to disrupt flow patterns• Large water infrastructure projects are neededand benefits have to be assessed:– Impacts are transmitted to the rest of the economythrough markets and changes in prices– Potential use of simulation models to analyzewater/economy/policy links3
    • 4. Modeling Paradigm• CGE-W is a water/economic simulation model– Water policies influence distribution of water– Repercussion on crop yields– Yield changes shock agricultural supply– Economy reacts by reallocating production factorsthrough market mechanisms and price changes– Changes in prices affect farmers’ decisions for thefollowing year• Economic policies also have indirect impacts onthe water sector 4
    • 5. Why a coupled model?• There are economic models with water factors– Do not capture the complexity of the Indus basin• There are water models with economic variables– Do not capture economywide links betweenagriculture and the rest of the economy• Our paradigm: Let each model do what it is bestat and make them talk to each other
    • 6. IFPRI Dynamic CGE-W Model6Economic policy options and trends, with land variablePrevious (or base) year water stressIndustrial and Domestic Water DemandAgricultural demand for water by cropsOptimizes water distribution over months in the yearCalculates water shortages per water region by monthAllocates supply of available water to cropsCalculates the impact of water stress on yieldsYield shocks affect agricultural production; land fixed by cropCGE model solves for final equilibrium for current yearCGEModelWaterDemandRWSMWaterStressCGEModel
    • 7. Computable General Equilibrium19Economic policy options and trends, with land variablePrevious (or base) year water stressIndustrial and Domestic Water DemandAgricultural demand for water by cropsOptimizes water distribution over months in the yearCalculates water shortages per water region by monthAllocates supply of available water to cropsCalculates the impact of water stress on yieldsYield shocks affect agricultural production; land fixed by cropCGE model solves for final equilibrium for current yearCGE ModelWaterDemandRWSMWaterStressCGE Model
    • 8. Computable General Equilibrium(CGE) Models• A standard tool of economic and policy analysisfor the past 40 years• Simulates operation of a market economy withsupply/demand equilibrium determining prices• IFPRI Standard CGE model (Lofgren andRobinson)20
    • 9. 21Stylized CGE Model StructureActivitiesCommodityMarketsFactorMarketsRest of theWorldHouseholds Government Sav./Inv.FactorCostsWages& RentsIntermediateInput CostSalesPrivateConsumptionTaxesDomestic Private SavingsGovernmentConsumptionGov. SavingsInvestmentDemandImportsExportsForeign SavingsTransfersForeign Transfers
    • 10. IFPRI Pakistan CGE Model• Based on the 2007-2008 SAM of Pakistan(Dorosh et al., 2012).– 63 activities and 48 commodities– Special focus on agriculture (15 agric commodities)– Large, medium, and small farms• Distinguishes 19 types of households and 10types of labor• Distinguishes Punjab, Sindh, and other provincesfor agricultural sector27
    • 11. Water Demand Module28Economic policy options and trends, with land variablePrevious (or base) year water stressIndustrial and Domestic Water DemandAgricultural demand for water by cropsOptimizes water distribution over months in the yearCalculates water shortages per water region by monthAllocates supply of available water to cropsCalculates the impact of water stress on yieldsYield shocks affect agricultural production; land fixed by cropCGE model solves for final equilibrium for current yearCGE ModelWaterDemandRWSMWaterStressCGE Model
    • 12. Water Demand Module• Computes agricultural cropped area based onthe CGE model results• The water demand is then computed using FAOguidelines• Industrial and Livestock water demand areproportional to the amount of activity in thesector• Domestic water demand is proportional tohousehold revenues29
    • 13. RWSM-Pak Water Model31Economic policy options and trends, with land variablePrevious (or base) year water stressIndustrial and Domestic Water DemandAgricultural demand for water by cropsOptimizes water distribution over months in the yearCalculates water shortages per water region by monthAllocates supply of available water to cropsCalculates the impact of water stress on yieldsYield shocks affect agricultural production; land fixed by cropCGE model solves for final equilibrium for current yearCGE ModelWaterDemandRWSMWaterStressCGE Model
    • 14. The Indus BasinSource: NASA Earth Observatory Source: IWMI32
    • 15. CGE-W version of IBMR: RWSM• Standalone water model: Regional Water SystemModel (RWSM).• RWSM-Pak: Pakistan version– Hydrology similar to IBMR.• RWSM does not have any internal representationof the economy– Links to CGE model for economic variables• Objective is to minimize agricultural watershortages across all Pakistan35
    • 16. Regional Water Simulation Model –Pakistan (RWSM-Pak)36
    • 17. RWSM-Pak Overview• Represents the 45 main canals, as well as the linkcanals between rivers• Takes into account fresh and saline groundwater,as well as public and private tubewell pumping• Can represent droughts and floods• Includes 16 representative crops• Takes into account industrial, domestic andlivestock water demand (assumed to be drawnfrom groundwater mostly)37
    • 18. Water Allocation Module39Economic policy options and trends, with land variablePrevious (or base) year water stressIndustrial and Domestic Water DemandAgricultural demand for water by cropsOptimizes water distribution over months in the yearCalculates water shortages per water region by monthAllocates supply of available water to cropsCalculates the impact of water stress on yieldsYield shocks affect agricultural production; land fixed by cropCGE model solves for final equilibrium for current yearCGE ModelWaterDemandRWSMWaterAllocationCGE Model
    • 19. Water Allocation Module• In case of water stress, the yield of crops isreduced using the FAO Ky approach (Doorenbosand Kassam, “Yield Response to Water”,1979)• We separate the stress during the four maingrowing stages of the crops and use amultiplicative approach to get the final value• The allocation objective is to maximize the valueof production in each of the water model areas,while minimizing risks for the farmers40
    • 20. Computable General Equilibrium44Economic policy options and trends, with land variablePrevious (or base) year water stressIndustrial and Domestic Water DemandAgricultural demand for water by cropsOptimizes water distribution over months in the yearCalculates water shortages per water region by monthAllocates supply of available water to cropsCalculates the impact of water stress on yieldsYield shocks affect agricultural production; land fixed by cropCGE model solves for final equilibrium for current yearCGE ModelWaterDemandRWSMWaterStressCGE Model
    • 21. The Two-Step Procedure• The productions from the different areas areaggregated to the provincial level and toeconomically representative cropping activities• The ratio of the current year yield to the base yearyield is used to shock the production of crops in asecond run of the CGE model
    • 22. Illustrative Results49Economic policy options and trends, with land variablePrevious (or base) year water stressIndustrial and Domestic Water DemandAgricultural demand for water by cropsOptimizes water distribution over months in the yearCalculates water shortages per water region by monthAllocates supply of available water to cropsCalculates the impact of water stress on yieldsYield shocks affect agricultural production; land fixed by cropCGE model solves for final equilibrium for current yearCGE ModelWaterDemandRWSMWaterStressCGE Model
    • 23. Illustrative Results• We run the dynamic model for 45 years (2005 to2050) using “guesstimated” growth coefficients• Capital growth is endogenous in the CGE model50
    • 24. 050100150200250300350 200820112014201720202023202620292032203520382041204420472050Baseline Projections - Historic Average Water StressGDP of PakistanPunjab Ag ProductionSindh Ag ProductionOthPak Ag Production
    • 25. GDP change adding variability and/orBasha dam-2-1.5-1-0.500.511.5200820112014201720202023202620292032203520382041204420472050Average with BashaHistoric InflowsHistoric with Basha
    • 26. Decadal GDP change under climatechange with or without Basha damScenario 2010s 2020s 2030s 2040sMIROC A1B -0.18 -0.44 -0.56 -0.77MIROC A1B with Diamer-Basha Dam 0.24 0.06 -0.01 -0.19MIROC B1 -0.16 -0.40 -0.53 -0.72MIROC B1 with Diamer-Basha Dam 0.26 0.11 0.01 -0.11CSIRO A1B -0.12 -0.30 -0.47 -0.73CSIRO A1B with Diamer-Basha Dam 0.30 0.19 0.07 -0.15CSIRO B1 -0.05 -0.16 -0.25 -0.42CSIRO B1 with Diamer-Basha Dam 0.36 0.32 0.26 0.16
    • 27. Decadal agricultural production changeunder climate changeScenario 2010s 2020s 2030s 2040sMIROC A1B -2.00 -4.21 -3.74 -3.42MIROC A1B with Diamer-Basha Dam 2.36 -0.38 -0.76 -1.60MIROC B1 -1.79 -3.80 -3.64 -3.02MIROC B1 with Diamer-Basha Dam 2.58 0.10 -0.68 -1.04CSIRO A1B -1.33 -2.88 -3.41 -3.45CSIRO A1B with Diamer-Basha Dam 3.05 0.93 -0.49 -1.63CSIRO B1 -0.58 -1.58 -1.86 -1.95CSIRO B1 with Diamer-Basha Dam 3.75 2.23 0.95 -0.03
    • 28. Conclusion• Climate variability (and water availability change)leads to wide GDP dips for Pakistan• Climate change represents a serious threat to theeconomy of Pakistan due to its reliance onirrigated agriculture• The Diamer-Basha dam can mitigate some ofthese effects until the 2030s in most climatechange scenarios

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