Table of Contents

Handbook of Water Economics

Handbook of Water Economics

Edited by Ariel Dinar and Kurt Schwabe

Water scarcity, whether in the quality or quantity dimension, afflicts most countries. Decisions on water management and allocation over time, space, and among uses and users involve economic considerations. This Handbook assembles research that represents recent thinking and applications in water economics. The book chapters are written by leading scholars in the field who address issues related to its use, management, and value. The topics cover analytical methods, sectoral and intersectoral water issues, and issues associated with different sources of water.

Chapter 4: Concepts and methods for assessing economic impacts from climate change on water resources

Brian H. Hurd

Subjects: economics and finance, environmental economics, environment, water


The scientific understanding that anthropogenic greenhouse gases are contributing to climate uncertainty and change is highly likely, according to the most recent fifth assessment report of the International Panel on Climate Change Climate (IPCC) (Stocker et al., 2013). Long-run changes in climate and water supply threaten both human and natural systems as extreme and persistent changes in temperature and precipitation affect natural systems, including evaporation and vegetative evapotranspiration, snowmelt, vegetation cover and streamflows. Such changes and the resulting changes in surface water and groundwater supplies will directly and indirectly affect water users. Agricultural systems, for example, which represent the largest diverter and consumer of freshwater supplies both nationally and globally, will in many regions need to adapt to higher temperatures and resulting higher evapotranspiration rates, and the direct effects of increased crop irrigation requirements. Additionally, farmers may face the need to adjust to possible indirect effects that higher irrigation requirements entail, including rising irrigation costs that accompany regional increases in water competition and demand, falling groundwater tables and rising pumping costs, and tighter restrictions and access to increasingly limited water supplies (Knapp et al., 2003; Mendelsohn and Dinar, 2003). Climate change also affects domestic water users along several direct and indirect pathways, leading, in many cases, to economic losses.

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