Economic regional impacts of water transfers: the role of factor mobility in a case study of the agricultural sector in the Balearic Islands


  • Dolores Tirado Universidad de las Islas Baleares
  • Javier Lozano Universidad de las Islas Baleares
  • Carlos Mario Gómez Universidad de Alcalá



Rural communities, Applied general equilibrium, Water market


Using a CGE model for the Balearic Islands, we simulate the effects of an agricultural water market in the farming sector facing reductions in the water endowment. The market lessens the negative effects on farming communities of short-term water restrictions associated with cyclical droughts. However, in scenarios of permanent reductions, such as those envisaged by global warming predictions or those that result from the implementation of the European Water Framework Directive, a water market may aggravate the negative effects of water shortage. Therefore, the paper shows that generalizations cannot be made about the effects of water markets on farming communities.


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Author Biographies

Dolores Tirado, Universidad de las Islas Baleares

Dep. of Applied Economics

Javier Lozano, Universidad de las Islas Baleares

Dep. of Applied Economics

Carlos Mario Gómez, Universidad de Alcalá

Dep of Economics and Economic History


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