According to researchers in a recent Nature Briefing journal, who investigated three main types of water, namely freshwater, seawater and desalinated water, using the GCAM system, both positive and negative trading and market impacts have been found. Under this model, six sectors were explored: irrigation, livestock, municipal, manufacturing, primary energy generation and more. The Global Change Analysis Model seeks to find the current equilibrium price of water by balancing its supply and demand. By generating a so-called “shadow” price, it accurately reflections existing economic conditions. For instance, when the supply is low, since there is no longer any water left in the basin, then the subsequent price of water will be high, resulting in a reduction in the number of products that relate to this output.
Water scarcity is traditionally measured using the WTA ratio or the Withdrawal-To-Availability ratio. It seeks to simply the measurements by dividing withdrawals with its supply. Certainly, sensitivities to climate change and uncertain weather conditions will influence the amount of aridity in the natural environment – hence influencing subsequent profit models or different corporations. To meet future projections on food and water supplies, it is important for hydrologists, scientists, and current research to continue their exploration into the factors which influence the price of water and how it shapes the financial sector.
The International Water Association has published Water Journal, providing readers with a more comprehensive set of scholastic knowledge into the hydrological industry. In time to come, climate scientists, hydrologists, etc. will need to create a standard set of guidelines whereby different stakeholders will have gainful access to open, transparent water tax information. For now, the correlation between pricing levels and aridity remains to be explored.
