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Estimating economic effects of changes in climate and water availability

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Abstract

Social, economic, and environmental systems can be vulnerable to disruptions in water supplies that are likely to accompany future climate changes. Coupled with the challenges of tightening environmental regulations, population growth, economic development and fiscal constraints water supply systems are being pushed beyond the limits of their design and capacity for maintenance. In this paper we briefly review key economic concepts, various economic measures and metrics, and methods to estimate the economic effects on water resources from water supply changes that could accompany climate change. We survey some of the recent empirical literature that focuses on estimates developed for U.S. watersheds at both national and regional scales. Reported estimates of potential damage and loss associated with climate and water supply changes that we observe are significant, though often the metrics vary and make valid and consistent direct cross-comparisons difficult. Whether in terms of changes in GDP or in terms of estimated changes in economic welfare based on associated changes in economic costs and benefits, both national and regional estimates suggest that governments and organizations incorporate prudent steps to assess vulnerabilities to plausible future water supply and demand scenarios and develop responsive adaptation strategies.

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Acknowledgements

The authors would first like to acknowledge the United States Environmental Protection Agency (USEPA) for their invitation to examine and present findings at their workshop on “Improving the Assessment and Valuation of Climate Change Impacts for Policy and Regulatory Analysis.” Second, we thank the contributions of Rob Mendelsohn (Yale Univ) and Joel Smith (Stratus Consulting, Inc.) for their intellectual contribution to the workshop and to our work together that is reported on here. Finally, we would like to thank the leadership and opportunities made possible by the Agricultural Experiment Station of New Mexico State University for their ongoing support of our research program.

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Authors and Affiliations

  1. Department of Agricultural Economics and Agricultural Business, MSC 3169, New Mexico State University, PO Box 30003, Las Cruces, NM, 88003, USA

    Brian Hurd

  2. Department of Agricultural and Consumer Economics, University of Illinois, Urbana-Champaign, 326 Mumford Hall, 1301 W. Gregory Drive, Urbana, IL, 61801-3605, USA

    Mani Rouhi-Rad

Authors
  1. Brian Hurd
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  2. Mani Rouhi-Rad
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Corresponding author

Correspondence to Brian Hurd.

Additional information

This article is part of a Special Issue on “Improving the Assessment and Valuation of Climate Change Impacts for Policy and Regulatory Analysis” edited by Alex L. Marten, Kate C. Shouse, and Robert E. Kopp.

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Hurd, B., Rouhi-Rad, M. Estimating economic effects of changes in climate and water availability. Climatic Change 117, 575–584 (2013). https://doi.org/10.1007/s10584-012-0636-9

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  • DOI: https://doi.org/10.1007/s10584-012-0636-9

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