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Economic Loss Estimation for Potential Water Scarcity in Northeast Brazil: Policy Guidance Study

This study assesses economic losses due to climate-induced water scarcity in Northeast Brazil, aiding policy decisions. Combining climate science and economic analysis, it offers cost-benefit insights for proactive planning. The methodology involves water demand projections, economic modeling, and sector-specific assessments to inform policymaking. With a bottom-up approach and collaboration with the National Water Agency of Brazil, the study presents tangible insights for sustainable water resource management.

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Economic Loss Estimation for Potential Water Scarcity in Northeast Brazil: Policy Guidance Study

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  1. Estimation of the Economic Loss Associated with the Potential Water Scarcity due to Climate Change over a River Basin in Northeast Brazil Guiding Policy-making Process on a Tangible Scientific Basis Layla Lambiasi, Researcher at the Center for Sustainability Studies (GVces) of the Business Administration School of Fundação Getulio Vargas (FGV-EAESP)

  2. REGION OF INTEREST: NORTHEAST BRAZIL 26% in alert 32% critical 1.406.808 habitants (2010) • Potential worst CC impacts • Already at risk (water crisis): severe droughts • Systems of intermittent reservoirs: All rain drops between February and May • Rural profile

  3. THE CONTEXT: A COST-BENEFIT ANALYSIS QUESTION ❶ Whereandfromwhat are weatrisk? Water deficits on a monthly basis for each district of the analyzed river basin QUESTION ❷ Whatisthe magnitude of theexpectedlosses? Economic loss in monetary terms divided by type of user QUESTION ❸ Howcanwerespond? Cost/benefit ratio of each measure

  4. SCALING UP SCENARIO PLANNING • Bring together climate science and economic • perspective to support decision-makers • Dealing with uncertainty in a proactive manner: • not trying to predict the future but be better prepare for whatever it might happen • Continuous modeling from 2016 to 2065 • Bottom-up approach

  5. METHODOLOGY AND ITS STEPS • Current water demands • B. Socioeconomic dynamics and driving-parameters of future water demands • C. Projections of economic development and population growth GDP evolution scenarios Population projections

  6. WATER ALLOCATION SOFTWARE AND THE CONDUCTED SIMULATIONS

  7. ESTIMATING ECONOMIC LOSSES FOR EACH WATER USER IN THE BASIN Production function method physical relation between the input production, in this case water, and the production activity in each water user sector First order tangible losses BASIN USER SECTORS MUNICIPALITIES STATES Corn, Beans, Gras, Melon... IRRIGATION Types of cattle CATTLE Hydrological management units Others... ... Most expressive types of agricultural crops in terms of water consumption, planted area, and size of production for banana; coconut; mango; corn; beans; rice; melon; and watermelon. Example

  8. RESULTS AND DISCUSSIONS Total incremental economic loss per scenario in 50 years

  9. Comparison between the total loss calculated from two different economic methods Evolution of annual average economic loss per decade and its relation with the basin GDP.

  10. ACKNOWLEDGEMENTS The cooperation with the National Water Agency (ANA) of Brazil was fundamental for developing this study. THANK YOU!! Layla Lambiasi layla.lambiasi@fgv.br

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