Investigating the Economic Impacts of Inter-Basin Water Transfer Projects with a Water- Embedded Multi - Regional Computable General Equilibrium Approach

Inter-basin water transfer projects are among the highly controversial issues in water supply policies. These projects have economic effects on the sources and destination areas. The costs and benefits of these projects should be investigated for their justification. This study examines the economic and welfare impacts of the Taleghan Water Transfer Project (TWTP) in Iran using a water-embedded multi-regional computable general equilibrium (WMRCGE) model. The results indicate that the increase in the equivalent variation (EV) of the water-receiving area is 6.9 times greater than the EV loss in the water supply area. Thus, the welfare improvement in the water-receiving area is much higher than the welfare loss in the water-supplying area. The results also indicated that the increase in total output in the water-receiving region is three times the total output reduction in the water supply region.