Economic Growth and Climate Change Bangkok 2013

Time Economic growth takes time to unfold Climate change takes time to unfold Cannot measure effects of climate change by just seeing how impacts change over time Must separate influence of economic growth from influence of climate change Dynamic world from economic growth is the baseline from which to measure climate effects

Water and Growth Economic growth rarely leads to more water supply More people and higher income lead to more residential water use Higher GDP means more industrial water demand More rainfed farming has little effect on water but more irrigated farming increases water demand- though farmers can substitute capital for water (sprinklers and drip)

Supply Price Water for farmers Water for Urban/Industry Farmer U & I Growth

Growth Requires Water Reallocation Growth alone will generally call for water to be reallocated from users with low marginal value to users with high marginal value In most cases, water needs to be shifted from farmers to U&I Failure to reallocate leads to large losses in U&I sector (slower overall economic growth)

Climate Change Climate change can exacerbate the water problem caused by growth by slightly increasing demand but mostly by reducing supply Need to find more efficient solution or water sector losses can be large

Supply Price Water for farmers Water for Urban/Industry Farmer U & I Growth and Climate Change

Water Reallocation as Adaptation By moving water to higher valued uses, water system can adapt to even large losses in supply California adapted to recent drought by buying water from lowest valued agricultural use (crops for livestock) With 25% loss of water supply, California agriculture declined only 3% Without reallocation loss would have been 25%