University of Sussex
Browse

File(s) not publicly available

The Economic Impact of Water Taxes: A Computable General Equilibrium Analysis with an International Data Set

journal contribution
posted on 2023-06-08, 11:06 authored by Maria Berrittella, Katrin Rehdanz, Roberto Roson, Richard TolRichard Tol
Water is scarce in many countries. One instrument for improving the allocation of a scarce resource is (efficient) pricing or taxation. However, water is implicitly traded on international markets, particularly through food and textiles, so that the impacts of water taxes cannot be studied in isolation, but require an analysis of international trade implications. We include water as a production factor in a multi-region, multi-sector computable general equilibrium model (GTAP), to assess a series of water tax policies. We find that water taxes reduce water use and lead to shifts in production, consumption and international trade patterns. Countries that do not levy water taxes are nonetheless affected by other countries' taxes. Taxes on agricultural water use drive most of the economic and welfare impacts. Reductions in water use (welfare losses) are less (more) than linear with the price of water. The results are sensitive to the assumed ability to substitute other production factors for water. A water tax on production would have different effects on water use, production and trade patterns and the size and distribution of welfare losses than would a water tax on final consumption. © IWA Publishing 2008.

History

Publication status

  • Published

Journal

Water Policy

ISSN

1366-7017

Publisher

IWA Publishing

Issue

3

Volume

10

Page range

259-271

Department affiliated with

  • Economics Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-04-17

Usage metrics

    University of Sussex (Publications)

    Categories

    No categories selected

    Exports

    RefWorks
    BibTeX
    Ref. manager
    Endnote
    DataCite
    NLM
    DC