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.