CGE Approach to Assess the Impacts of Water Scarcity due to Climate Change in Japan :Focus on Agriculture Sector Hiroshi Hamasaki

Transcription

1 Water SDGs and Future Water Management CGE Approach to Assess the Impacts of Water Scarcity due to Climate Change in Japan :Focus on Agriculture Sector Hiroshi Hamasaki Senior Research Fellow Economic Research Centre, Fujitsu Research Institute Truong Phuoc Truong Professor Institute of Transport and Logistics Studies, The University of Sydney Business School, University of Sydney

2 Contents I. Introduction & Motivation II. Water Issues in Japan III. Methodologies IV. Simulations I. Drought Impacts II. Benefits of Water Trading Market V. Concluding Remarks VI. Further Challenges 2

3 I. Introduction & Motivation Japan is surrounded by sea and little attention is paid to domestic water management. Volatile weather change, frequent drought and flood and continuous climate change, increasing temperature and increasing number of non-rain days and decreasing snowfall, bring about water scarcity impacts. There is no research on water scarcity effects from economic point of view. Partial economic model is unable to provide indirect effects of changes, but CGE (computable general equilibrium) model provide more complete welfare assessment, incorporating constraints and feedbacks between different economic sectors and agents. We develop CGE model which include water sector and estimate how water scarcity impact spread in Japanese economy and estimate water market benefits. 3

4 II. WATER ISSUE IN JAPAN 4

5 Japan Water Issue was Virtual Water through Food Imports No more droughts in Australia and California!! 100 million m3 Source: MoE, 5

6 Water Resource and Demand renewable water resources per capita (m3/inhab/year) Water Demand (100 million m3/year) 6

7 mm Volatile Rain Fall 1,650 mm/yr in 1900 Deviation from average, ,570 mm/yr in 2013

8 Increasing Precipitation Intensity High Temperature High Precipitation Intensity Decline of Rainfall Volatile Rainfall Decline of Snowfall High Frequency of Drought Low Water Supply Source: Utsumi et. al., (2011) 8

9 MAFF(2013) Still Customary Water Rights have been Major One in Agriculture Sector. Water Rights are tighted to Land Ownership. 9 Source: MAFF

10 III. METHODOLOGIES 10

11 TERM_J_Water Partial economic model is unable to provide indirect effects of changes, but CGE (computable general equilibrium) model can provide more complete welfare assessment, incorporating constraints and feedbacks between different economic sectors and agents. TERM Model was originally developed by COPs (Centre of Policy Studies), Victoria University and a multi-regional Australia CGE model. TERM version for Japan was constructed by Yamamoto, from 104-sector and distinguishing 47 bottom-up regions In this research, we have incorporated water consumption module to TERM model version for Japan and aggregated regions to 14 regions to fit to water consumption statistics. 11

12 Regional Categorisation (14) Hokkaido Okinawa Tohoku Chugoku_I Chugoku_Y Kinki_N Hokuriku Kanto_N Kyushu_N Tokai Kanto_R Kyushu_S Kinki_R Shikoku 12

13 Production Function of Agriculture Scooping Good 1 -bottom water of ponds/dams -Temporally dug -Water Transported STOCKby Vehicles. Domestic Good 1 Good 1 CES Imported Good 1 Intermediate CES Cut Off As a last resort, water delivery to Domestic Good G CES Imported Good G Leontief some paddy Good files is G to be stopped to suffer poor harvest in add paddy fields. Irrigated Land/Water Water Leontief Re-use Primary Factors To reuse drainage water by pumping. CES Land/Water Labour Capital CES Irrigated Land Dry Land Skilled CES Conversion of Rice Paddy to Dry Agricultural Land 13 Conversion Unskilled

14 Japan Water Consumption 100 million m 3 /year Daily Life Water Industrial Water Agricultural Water TOTAL Hokkaido Tohoku Kanto_N Kanto_R Tokai Hokuriku Kinki_N Kinki_R Chugoku_I Chugoku_Y Shikoku Kyushu_N Kyushu_S Okinawa TOTAL Source: MLIT 14

15 Huge Water Price Gap JPY/m 3 15

16 IV. SIMULATIONS 16

17 Scenario Scenario Water Restriction to Agricultural Sectore Water Trade Between Regions No-Trade Trade 17

18 No-Trade IV-I. DROUGHT IMPACTS ON ECONOMY 18

19 Water Restrictions due to 1994 Drought 19

20 Agricultural Output 20

21 Real Wage 21

22 GDP Impacts -1.45% 22

23 Comparison Between No-Trade and Trade IV-2. BENEFITS OF WATER TRADING MARKET 23

24 Water Demand 100 mill m3/year Seller Buyer 24

25 Water Price (JPY/m3) 25

26 Without Water Market (No-Trade) Agricultural Output With Water Market (Trade) 26

27 Without Water Market (No-Trade) GDP Impacts With Water Market (Trade) -1.45% -0.41% 27

28 Welfare Gains due to Water Market 28

29 Welfare Change Billion JPY/Year 29

30 V. Concluding Remarks Under current no water market situations, agricultural production decrease substantially. To create water market will have a potential to minimise the impacts of FY1994 level drought on agricultural sector and welfare is expected to increase in all regions. 30

31 VI. Further Challenges Include Water Trade Infrastructure Cost Water Pipeline For Agricultural Water Seasonality of Water Demand and Rainfall Water Demand Pattern in Agriculture 31

32 328-9 Nov, 2016

33 Water Trading Market c QWTR AGR d 0.01 = ( ) QW0 AGR(d) (p PWT AGR d WATER ELAS(d) p PW0 AGR) c QWTR AGR(d) WATER ELAS(d) QW0 AGR(d) p PWT AGR d p PW0 AGR : Absolute Change of Water Demand in Region d : Water Price Elasticity of Demand in Region d : Water Supply in Region before Trade in Region d : percentage change in water price due to trade in Region d : percentage change in water price after the initial shock and before trading.

34 Labour Share of Agriculture 34

35 Water Restriction due to 1994 Regions Watershed Facility Nakagawa River Droughts Kanto Chubu Kinki Chugoku Restriction Duration (Days) Water Ristriction (%) Clean Water Industrial Water Agricultural Water Tonegawa River Upper Stream 8 Dams Arakawa River Futase Dam 5 90 Iwaya Dam Makio Dam Kiso River Agigawa Dam Yokoyama Dam Toyo River Uregawa Dam Yahagi River Yahagi Dam Oi River Ooi Dam Tenryu River Sakuma Dam Kushida River Hachisu dam Kumozu River Kimigano Dam Miwa Dam Yodo River Murou Dam Kizugawa Hitokura Dam Kako River Kakogawaoozeki Dam Ibo River Hikihara Dam Kino River Saruya Dam Takanashi River Shinnaruhagawa Dam Asahi River Asahikawa Dam Ota River Chiden Gono River Haji dam Ashida River Mikawa dam Saba River Shimajigawa Dam Yoshino River Sameura Dam Yanase dam Shikoku Shigenobu River Ishitegawa dam Niyodo River Oodo Dam Naka River Kominono Dam Monobe River Nagase Dam Kyushu Chikugo River Egawa Dam Source: Kawashima and Takahashi (1995)

36 Water Usage Pattern 36 MAFF (2013)