Integrated economic models to support decisions on water pricing in biofuel production river basins: three case studies from Brazil

What is it about?

This paper describes the main features of two economic modeling approaches that can support effective water pricing decisions. . Three case studies illustrate sugarcane ethanol production river basins in Brazil where water prices have already been established but fail to reflect the real scarcity value of water in the region.

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Why is it important?

Bioenergy production can offer opportunities to regions with economic indicators at risk, (e.g. high unemployment rates, low per capita income, high poverty rates) and can benefit overall economic development and industrialization. At the same time, challenges related to environmental impacts, especially water resources depletion and degradation, are often considerable in developing countries with weak law-enforcement institutions and limited resources for pollution control and environmental management. Thus, public policies need to avoid a situation where the potential contribution to the world’s renewable energy challenge results in a transfer of negative environmental and economic impacts to the producing regions, aggravating already complex sets of water and environmental problems