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Economic Evaluation of Climatic Change Impacts on Water Resources at River Basin Scale: Insights from the Vergara River Basin – Chile.

IWRA World Water Congress 2017 - Cancun Mexico
A. Bridging science and policy
Author(s): Felipe Vásquez-Lavín
Roberto Ponce
Sergio Orrego
Eduardo Letelier
Alejandra Stehr
Diego Rivera
Francisco Fernandez

Felipe Vásquez-Lavín
Facultad de Economía y Negocios - UDD - Chile
fvasquez@udd.cl
Roberto Ponce
Facultad de Economía y Negocios - UDD - Chile
robertoponce@udd.cl
Sergio Orrego
Departamento de Ciencias Forestales. Universidad Nacional de Colombia, sede Medellín
saorrego@unal.edu.co
Eduardo Letelier
PhD Student. Gestión Avanzada en Economía Social de la Universidad de Mondragon – España
eduardo.letelier@gmail.com
Alejandra Stehr
Centro EULA - Universidad de Concepción - Chile
astehr@udec.cl
Diego Rivera
Facultad de Ingeniería Agrícola, Universidad de Concepción - Chile
dirivera@udec.cl
Francisco Fernandez
Centro de Investigación en Sustentabilidad y Gestión Estrategica de Recursos - UDD - Chile
francisco.fernandezj@upm.es
Dragana Bojovic
Euro-Mediterranean Centre on Climate Change and Venice Centre for Climate Studies – Venice – Italy.
dragunlija@gmail.com


Keyword(s): Welfare assessment, hydro-economic model, climate change, agriculture, residential water demand, river basin, integrated water resources management.
Article:

Abstract

This paper presents the results of the “Economic Evaluation of Climatic Change Impacts on Water Resources at River Basin Scale” project (eec2-water project) developed in Chile, Colombia, and Bolivia. The project is a combined effort between Universities, NGOs, and local government institutions, which aims at providing useful information for policy makers, increase awareness about climate change among stakeholders and fostering undergraduate and graduate students.

The main objective of this project is to provide an analytical tool that allows policy makers to identify the economic impacts of climate change on water availability at a basin scale taking into consideration the spatial allocation of users and to evaluate different policy strategies in order to minimize the economic impact of those changes.

To reach our goal we rely on a hydro-economic model, which links the physical impacts of climate change (decrease on water availability) with the economic responses of water users. The physical impacts on water supply are modeled using the SWAT hydrologic model for the basin, and the potential economic responses of distinct water users are analyzed using an appropriate combination of econometric and optimization methods.

This approach allows us to identify both the economic sectors and the population groups that will likely be affected by changes on water availability, as well as to identify policy alternatives that can be used to cope with climate change, and evaluate them using a cost effectiveness approach. Any potential change would have winners and losers, but some of the affected communities are not necessarily identified by the hydro-economic model due to their little share in the agricultural production or residential consumption. This is, for instance, the case of several agricultural communities oriented to subsistence agricultural production. Therefore, our hydro-economic analysis is accompanied by the  identification of the most vulnerable communities using participatory techniques.

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