Marginal-Cost versus Average-Cost Pricing with Climate Shocks in Senegal: A Computable Dynamic General Equilibrium Model Applied to Water
Briand, Anne
Marginal-Cost versus Average-Cost Pricing with Climate Shocks in Senegal: A Computable Dynamic General Equilibrium Model Applied to Water - 2008.
19
The model simulates two successive phases over a 20-year horizon: the first is characterized by an increase in water-resource availability reflecting the Senegalese government’s supply policies; the second is marked by hydrological deficits due to higher demand fueled by demographic growth. The results show that marginal-cost water pricing – with a subsidy ensuring the survival of the water-production sector – makes it possible to absorb the shock of the resource shortage in the long run. GDP, investment, and welfare increase. Unemployment declines and the rain-fed rice, market-gardening, and drinking-water distribution sectors expand. In contrast, the current policy of average-cost water pricing– which aims to balance the sector’s budget – leads to economic recession in the long term: agricultural production plunges, welfare drops sharply, and unemployment rises.
Marginal-Cost versus Average-Cost Pricing with Climate Shocks in Senegal: A Computable Dynamic General Equilibrium Model Applied to Water - 2008.
19
The model simulates two successive phases over a 20-year horizon: the first is characterized by an increase in water-resource availability reflecting the Senegalese government’s supply policies; the second is marked by hydrological deficits due to higher demand fueled by demographic growth. The results show that marginal-cost water pricing – with a subsidy ensuring the survival of the water-production sector – makes it possible to absorb the shock of the resource shortage in the long run. GDP, investment, and welfare increase. Unemployment declines and the rain-fed rice, market-gardening, and drinking-water distribution sectors expand. In contrast, the current policy of average-cost water pricing– which aims to balance the sector’s budget – leads to economic recession in the long term: agricultural production plunges, welfare drops sharply, and unemployment rises.
Réseaux sociaux