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Water Security and Multi-Sector Trade-Offs Under Climate Change: A Hydro-Economic Model for the Biobío River Basin, Chile
(World Scientific Pub Co Pte Ltd, 2025-03-29)
Francisco Fernández Jorquera
;
Esteban Arias Montevechio
;
María Victoria Ferrera Cordero
;
Mauricio Leiva
;
Pablo S. González
Water availability has been declining in recent years due to climate change. These decreases, in conjunction with rising temperatures and environmental changes, affect the behavior of various stakeholders, increasing the competition among water-consuming sectors to obtain this limited resource. In this study, we perform a hydro-economic model to analyze how the agricultural and residential sectors adapt to diverse climatic, social and regulation changes, using the Biobío basin in southern Chile as the case study. The model quantifies their economic welfare derived from using water as an input for their cropping activities and direct consumption, respectively, while maintaining environmental flows, rural drinking water, and supporting tourism activities. Furthermore, we assess the economic effects of increasing water security for the environment and tourism sectors. Results show that climate change and water security policies will have heterogeneous effects on water-consuming agents across different basin levels — higher-, medium-, and lower-basin levels — with the greatest effects being addressed by the higher-level basin. This heterogeneity is observed not only within the basin levels but also across economic sectors, being the agricultural sector significantly more affected by these policies than the residential sector. We conclude our analysis by suggesting that policymakers should tailor compensation measures to the most affected communities. </jats:p>
Scopus© Citations 1 6
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Price Elasticity of the Residential Water Demand in Latin America: Empirical Analysis for Chile, Colombia, and Peru
(World Scientific Pub Co Pte Ltd, 2025-05-16)
Alejandra Chovar Vera
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VÁSQUEZ LAVÍN , FELIPE ANTONIO
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Iván Lucich
;
Jackeline Lucero
;
Sergio Orrego
The Latin American region lacks information on residential water demand and its price elasticity, in contrast to the extensive literature available in developed countries. To address this gap, we estimate residential water demand and its price elasticity in Chile, Colombia, and Peru using a discrete-continuous choice (DCC) model that accommodates nonlinear increasing block tariff (IBT) structures. We utilize household-level datasets for Peru and Colombia and a large administrative panel in Chile. Our findings reveal that the price elasticity of water demand varies significantly across countries. Chile exhibits moderately inelastic demand ([Formula: see text] overall, [Formula: see text] during summer months), while Colombia lies in a mid-range ([Formula: see text]), and Peru shows greater price responsiveness ([Formula: see text]). Furthermore, we find variations within each country when we analyze different levels of observed consumption by households. Additionally, household characteristics such as size and income are important drivers for understanding consumption patterns. Our research highlights the need for tailored policies that account for local consumption behaviors and socio-economic factors to improve the effectiveness of block tariff systems, given that IBT holds relevance from a policy perspective. These findings contribute to the literature on water pricing in Latin America and provide evidence-based insights for policymakers.
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