Sunday, November 6, 2011

Bio-economic modeling of water quality improvements using a dynamic applied general equilibrium approach
Abstract: An integrated bio-economic model is developed to assess the impacts of pollution reduction policies on water quality and the economy. Emission levels of economic activities to water are determined based on existing environmental accounts. These emission levels are built into a dynamic economic model for the Dutch economy and subsequently coupled to a national water quality model. The modular approach has the advantage that the impacts on the economy and water quality are evaluated simultaneously, but each within their own domain based on the appropriate scale and level of detail. The dynamic nature of the economic model allows us to also evaluate a derogated water policy as foreseen in the European Water Framework Directive. The indirect costs of different water quality improvement policy scenarios are at least as high as the direct costs related to investments in pollution abatement technology. The stricter the policy scenario, the more important the role of economic adjustment and restructuring mechanisms at the macro-economic level. Significant water quality improvements can be achieved through stringent domestic emission reductions. However, reaching water quality standards is highly dependent on water quality improvement policy in surrounding river basin countries and climate change.

► A dynamic model is presented to link water quality and economic activity.
► Impacts of emission policies on water quality and economic costs are evaluated.
► Water quality depends also on policies in neighbour countries and on climate change.
► Improved quality of water inflow is necessary to reach European targets downstream.
► Indirect costs of policies are at least as high as the direct abatement costs.

by Rob Dellink 1 and 2, Roy Brouwer 1, Vincent Linderhof 3, and Karin Stone 4
1. Department of Environmental Economics, Institute for Environmental Studies, VU University Amsterdam, De Boelelaan 1087, 1081 HV, Amsterdam, The Netherlands
2. Environmental Economics and Natural Resources Group, Wageningen University and Research Center, Hollandseweg 1, 6706 KN Wageningen, The Netherlands
3. LEI, Wageningen University and Research Center, The Hague, The Netherlands
4. Deltares, Rotterdamseweg 185, Delft, The Netherlands
Ecological Economics via Elsevier Science Direct
Volume 71; November 15, 2011; Pages 63-79
Keywords: Bio-economic model; Applied general equilibrium model; Water quality model

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