Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/89023 
Year of Publication: 
2012
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-328
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
Ongoing climate change will increase competition for water. Diversified demand for water—in contrast with the rigid design of water systems, institutions and infrastructure—could hinder the implementation of adaptation policies in water management for Latin American countries. In this context, weather derivatives are proposed as a complementary mechanism for the successful adoption of more efficient water allocations in irrigation districts. Weather derivatives spread risks and incorporate a better understanding of climate system behavior, strengthening irrigation districts’ ability to deal with water availability and demand. The model uses a dynamic water resource allocation model, historical precipitation and Intergovernmental Panel on Climate Change (IPCC) scenarios to find optimal water allocation strategies for the baseline scenario and in the presence of climate change. This analysis is applied to two irrigation districts in Latin America: one in Mexico and the other in Peru, with their corresponding particularities and results.
JEL: 
G13
O13
O54
Q15
Q25
Q54
Document Type: 
Working Paper

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