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Integrated water and economic modelling of the impacts of water market instruments on the South African economy

Van Heerden, Jan, Blignaut, James Nelson and Horridge, Mark (2007) Integrated water and economic modelling of the impacts of water market instruments on the South African economy. Ecological Economics, 66 (1). pp. 105-116. ISSN 0921-8009

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Abstract

A static computable general equilibrium model of South Africa is adapted to compare new taxes on water demand by two industries, namely forestry, and irrigated field crops. Comparisons are made with respect to both the short and the long run, in terms of three target variables, namely (i) the environment; (ii) the economy; and (iii) equity. Since the taxes on the two industries do not raise the same amount of revenue, the target variables are calculated per unit of real government revenue raised by the new taxes (also referred to as the marginal excess burdens of the taxes). The model results are robust for moderate values of the water elasticity of demand in the two industries, in both the long and the short run. The tax on irrigated field crops performs better in terms of all three the target variables in the short run. In the long run the tax on irrigated filed crops is better in terms of water saving, but reduces real GDP and the consumption by poor households.

Item Type: Article
Uncontrolled Keywords: computable general equilibrium modelling, water markets, water tax, market-based instruments, social accounting Matrix
Subjects: FOR Classification > 0502 Environmental Science and Management
FOR Classification > 1402 Applied Economics
Faculty/School/Research Centre/Department > College of Business
Faculty/School/Research Centre/Department > Centre of Policy Studies (CoPS)
Depositing User: Ms Julie Gardner
Date Deposited: 09 Apr 2014 23:43
Last Modified: 30 Sep 2015 04:51
URI: http://vuir.vu.edu.au/id/eprint/24619
DOI: https://doi.org/10.1016/j.ecolecon.2007.11.011
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Citations in Scopus: 33 - View on Scopus

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