Various adaptation and mitigation strategies have been explored to cope with changes in the climate. Estimating these strategies impacts on the local economy is one of the growing and pressing issues for the management of natural resources. This thesis consists of three parts and aims to contribute to regional economic studies by analyzing: (1) the economic impact of solar energy facilities, (2) the level of virtual water flow and the effectiveness of scenarios to mitigate water resource shortage, and (3) the impact of climate change on agriculture through a Ricardian approach weighted by stream flow connectivity. As an increasingly adopted renewable energy resource, solar power has a high potential for carbon emission reduction and economic development. In the first essay the impacts on jobs, income, and economic output of a new solar power plant are calculated in an input-output framework. The contribution is twofold. First, we compare the multipliers generated by the construction and operation/maintenance of a plant located in California with those that would pertain had it been built in Arizona. Second, we point out the differences in the results obtained with the popular IMPLAN software from those obtained with the solar photovoltaic model of JEDI. The second essay focuses on water use in Arizona. As much as 73% of the state's scarce water is used by a single sector: crop production. Because 79% of Arizona's crop production is consumed outside the state, this means that, 67% of the water available in the state is being exported to the rest of the country and abroad. This should be of major concern for a state expected to see its population grow and its climate get drier. Using input-output techniques we explore three scenarios aimed at saving 19% of the water available. This figure is based on the results of the first of the scenarios that explores how much can be saved through improving the efficiency of the current irrigation system. The second scenario shows that equivalent water savings could be reached by a twenty-seven-fold increase in the price of water. The third scenario shows that a 19.5% reduction in crop exports could conserve an equal amount of water. The model results suggest that the least costly solution is a more efficient irrigation system, while export reduction is the second best choice. The third and final essay offers an extension of the well-known Ricardian model of agrarian economic rent. In spite of its popularity among studies of the impact of climate change on agriculture, there has been few attempts to examine the role of interregional spillovers in this framework. We remedy this gap by focusing on the spatial externalities of surface water flow used for irrigation purposes and demonstrate that farmland value—the usual dependent variable used in the Ricardian framework—is a function of the climate variables experienced locally and in upstream locations. This novel approach is tested empirically on a spatial panel model estimated across the counties of the Southwest USA for every five-year period from 1997 to 2012. This region is one of the driest in the country, hence its agriculture relies heavily on irrigation with the preponderance of the sources being surface water transported over long distances. The results highlight the significant role of irrigation spillovers and indicate that the actual impact of climate change on agriculture and subsequent adaptation policies can no longer overlook the streamflow network.

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Canadian agriculture trade with the United States, specifically trade in livestock and livestock commodities, has flourished under the NAFTA regime. However, the benefits of this trade liberalization have hidden environmental costs that seldom get noticed or accounted. The purpose of this research was to evaluate the hidden cost on water resources by first assessing the virtual water content (VWC) of various types of livestock and livestock products and then quantifying the virtual water flow (VWF) related to trade in livestock and its products between Canada and United States. The study also examined the North American Free Trade Agreement (NAFTA) and evaluated its implications for Canadian water resources. The research was conducted in three parts. First, the background literature on NAFTA was studied and trade data were collected to understand the NAFTA regime and study the impacts on Canadian exports of livestock and livestock products from the 1990s. The trade data were collected from provincial agricultural ministries and Statistics Canada. Secondly, datasheets were created to calculate the VWC in the various categories of animals and ultimately to estimate VWF between the two countries. Finally, Alberta and Ontario were chosen as case study areas to investigate localized impacts on water resources due to trade under NAFTA. The research results indicate that there is a large difference in the amount of VW being transferred through livestock and livestock commodities from Canada to the U.S. The average difference in trade has been calculated to be 3.6 billion m3 per year. This makes Canada a net exporter of virtual water to the U.S. A closer look at the trade patterns reveals that the U.S. imports mostly water-intensive commodities like cattle and cattle commodities, while it exports mostly less-water intensive commodities like chicken and mutton. By eliminating numerous trade barriers, the agreement has allowed competitive market forces to play a more dominant role in determining agricultural trade flows between the two countries. NAFTA has been criticized and contested at different levels for encouraging bulk water export from Canada to the U.S. What has not received attention in this debate is that water is also being exported in other forms, i.e., the virtual form. The hidden environmental, costs (for the exporting countries) or benefits (to the importing countries) are not reflected in the pricing of agricultural commodities. NAFTA’s mandate for the expansion of trade and investment through the removal of all trade barriers between the two countries is encouraging increased VW trade. This trade, if overlooked, can have deleterious impacts on the water resources of Canada.

Canadian agriculture trade with the United States, specifically trade in livestock and livestock commodities, has flourished under the NAFTA regime. However, the benefits of this trade liberalization have hidden environmental costs that seldom get noticed or accounted. The purpose of this research was to evaluate the hidden cost on water resources by first assessing the virtual water content (VWC) of various types of livestock and livestock products and then quantifying the virtual water flow (VWF) related to trade in livestock and its products between Canada and United States. The study also examined the North American Free Trade Agreement (NAFTA) and evaluated its implications for Canadian water resources. The research was conducted in three parts. First, the background literature on NAFTA was studied and trade data were collected to understand the NAFTA regime and study the impacts on Canadian exports of livestock and livestock products from the 1990s. The trade data were collected from provincial agricultural ministries and Statistics Canada. Secondly, datasheets were created to calculate the VWC in the various categories of animals and ultimately to estimate VWF between the two countries. Finally, Alberta and Ontario were chosen as case study areas to investigate localized impacts on water resources due to trade under NAFTA. The research results indicate that there is a large difference in the amount of VW being transferred through livestock and livestock commodities from Canada to the U.S. The average difference in trade has been calculated to be 3.6 billion m3 per year. This makes Canada a net exporter of virtual water to the U.S. A closer look at the trade patterns reveals that the U.S. imports mostly water-intensive commodities like cattle and cattle commodities, while it exports mostly less-water intensive commodities like chicken and mutton. By eliminating numerous trade barriers, the agreement has allowed competitive market forces to play a more dominant role in determining agricultural trade flows between the two countries. NAFTA has been criticized and contested at different levels for encouraging bulk water export from Canada to the U.S. What has not received attention in this debate is that water is also being exported in other forms, i.e., the virtual form. The hidden environmental, costs (for the exporting countries) or benefits (to the importing countries) are not reflected in the pricing of agricultural commodities. NAFTA’s mandate for the expansion of trade and investment through the removal of all trade barriers between the two countries is encouraging increased VW trade. This trade, if overlooked, can have deleterious impacts on the water resources of Canada.