Welfare and Distribution Effects of Water Pricing Policies

In this paper, distribution and welfare effects of changes in block price systems are evaluated. A method is discussed to determine, for a Marshallian demand function, equivalent variation in case of a block price system. The method is applied to analyze welfare and distribution effects of changing water prices in the Metropolitan Region of São Paulo. Results show that there is a trade off between average welfare and income distribution. A pro-poor price system may result in lower average welfare than a flat price system, but in higher individual welfare for the poor. Moreover, there is a trade off between revenues for the water company and income distribution. Even though pro-poor price systems may not be as good for average welfare as flat price systems, their direct effects on poverty are important. Introducing pro-poor price systems, however, may have financial consequences for the water companies.Water Demand, Welfare Economics, Equivalent Variation

Climate Change and the Stability of Water Allocation Agreements

We analyse agreements on river water allocation between riparian countries. Besides being efficient, water allocation agreements need to be stable in order to be effective in increasing the efficiency of water use. In this paper, we assess the stability of water allocation agreements, using a game theoretic model. We consider the effects of climate change and the choice of a sharing rule on stability. Our results show that both a decrease in mean river flow and an increase in the variance of river flow decrease the stability of an agreement. An agreement where the downstream country is allocated a fixed amount of water has the lowest stability compared to other sharing rules.Water Allocation, Stability, Climate Change, Game Theory

Investing in Arms to Secure Water

Where nations depend on resources originating outside their borders, such as river water, some believe that the resulting international tensions may lead to conflict. Homer-Dixon (1999) and Toset et al. (2000) argue such conflict is most likely between riparian neighbours, with a militarily superior downstream 'leader' nation. In a two stage stochastic game, solutions involving conflict are more common absent a leader, where a pure strategy equilibria may not exist. When upstream defensive expenditures substitute for water using investments, a downstream leader may induced an arms race to increase downstream water supplies. Water scarcity may not be a cause for war, but may cause a buildup in arms that can make any conflict between riparian neighbours more serious.

Designing a Decision Support System for Marine Reserves Management: An Economic Analysis for the Dutch North Sea

In this paper we discuss how a Decision Support System (DSS) for managing the marine environment can be set up. We use the Driving force-Pressure-State-Impact-Respond (DPSIR) framework to analyze which are the major driving forces impacting upon the marine environment in the North Sea. Moreover, a number of potential responses are identified. Furthermore, a preliminary and simplified optimization model has been set up and can be used in a DSS to decide on the best location of marine reserves for the protection of species. The model is based on a bio-economic metapopulation model that can be used to decide which parts of the sea should be opened for fisheries and which should be protected as marine reserve. It accounts for the dispersal of fish and considers both the economic returns from fisheries and the ecological value of marine biodiversity. A number of suggestions are given on how to extend and improve the DSS.Decision Support System, Marine Biodiversity Conservation, DPSIR Framework, Bioeconomic Modeling, North Sea

Effects of Great Barrier Reef Degradation on Recreational Demand: A Contingent Behaviour Approach

Agricultural run-off from the Great Barrier Reef catchment area may cause degradation of coral reefs, affecting the tourism sector that relies on healthy reefs for its income generation. A Contingent Behaviour approach is used to determine the effect of reef degradation on demand for recreational dive and snorkel trips, for a case study of the Great Barrier Reef (GBR) in Australia. We assessed how reef degradation affects GBR tourism and to what extent reef-trip demand depends on the visitors' socio-economic characteristics. A count data model is developed, and results indicate that an average visitor would undertake about 60% less trips to the GBR per year, given a combined 80%, 30% and 70% decrease in coral cover, coral diversity and fish diversity, respectively. This corresponds to a decrease in tourism expenditure for reef trips in the Great Barrier Reef Marine Park area of about A$ 136 million per year.Coral reef, Recreation, Contingent Behaviour model, Count data models, Resource /Energy Economics and Policy, Q26, Q51, Q57,

Biological control of invasive plant species: stochastic economic analysis

We analysed to what extent the stochastic effects of two biological control agents (i.e. weevils and mycoherbicides) affect the optimal choice of Californian thistle control. A stochastic, dynamic optimisation model was set up to analyse strategies that maximise the expected net present values. We analysed the cost-effective strategies to control the thistle for deterministic and stochastic cases. Results show that the stochasticity of the efficacy of weevils does not affect the optimal strategy. Compared to the deterministic case, however, mycoherbicides will be introduced at a higher level of weed density if we take the stochastic effect of mycoherbicides into account.Stochastic, Optimisation, Biological control, Californian thistle, Economics.,

Fishing in a Shallow Lake: A Case for Effort Controls?

In many situation, fishing activity adversely impacts the state of the marine ecosystem, impacts which feed back to affect fish stocks. Some ecosystems appear to have multiple equilibria and exhibit hysteresis, whereby they can become stuck in low productivity states. We show how adding ecosystem dynamics to a classic fisheries model can introduce hysteresis impacts, impacts that affect both the evolution of the fish stock and the fishery harvesting it. We demonstrate that harvest and effort taxes are not equivalent instruments for controlling this externality. We also show that if the fishery is sufficiently degraded, it may not be optimal to move the system back to a healthy environment

Investing in Arms to Secure Water

Where nations depend on resources originating outside their borders, such as river water, some believe that the resulting international tensions may lead to conflict. Homer-Dixon (1999) and Toset et al. (2000) argue such conflict is most likely between riparian neighbours, with a militarily superior downstream 'leader' nation. In a two stage stochastic game, solutions involving conflict are more common absent a leader, where a pure strategy equilibria may not exist. When upstream defensive expenditures substitute for water using investments, a downstream leader may induced an arms race to increase downstream water supplies. Water scarcity may not be a cause for war, but may cause a buildup in arms that can make any conflict between riparian neighbours more serious

Investing in Arms to Secure Water

Where nations depend on resources originating outside their borders, such as river water, some believe that the resulting international tensions may lead to conflict. Homer-Dixon (1999) and Toset et al. (2000) argue such conflict is most likely between riparian neighbours, with a militarily superior downstream 'leader' nation. In a two stage stochastic game, solutions involving conflict are more common absent a leader, where a pure strategy equilibria may not exist. When upstream defensive expenditures substitute for water using investments, a downstream leader may induced an arms race to increase downstream water supplies. Water scarcity may not be a cause for war, but may cause a buildup in arms that can make any conflict between riparian neighbours more serious