Poverty in the Pirapama Basin: The Role of Management of Hydrological Resources

The sustainable use of water resources has become a very popular theme in scientific literature along with a broader discussion about the sustainable use of natural resources. More specifically, there is an increased interest in how climate change may affect water availability. The social and economic impact of different water allocation strategies has recently been modeled and measured (Bhatia et al, 2006, Moraes et al, 2009, CALZADILLAA et al, 2013). Many studies have shown that the anthropogenic emissions of greenhouse gases may be responsible for changes in weather conditions on the planet (IPCC, 2007 COMOU; ROBINSON & Rahmstorf, 2013). The economic impact resulting from these changes is likely to be strongly influenced by the increased water availability for agricultural production.

Water availability for agriculture is related not only to the natural conditions of the climate, but also to water resources management practices that define supply and demand conditions. Thus, the rational and efficient use of water mainly through demand management – using water allocation policies - becomes urgent. There are many benefits that can be derived from the application of adequate water allocation policies, such as: environmental, for example, an improvement in water quality; or economic, for example higher economic returns from activities that use water, such as agriculture.

The probable diminishing of rainfall rates, resulting from climate change, is potentially disastrous. This is true especially for individuals living in regions already in a socioeconomic context of poverty and whose incomes are closely linked to the availability of natural resources.

This study aims to develop an integrated framework to assess the effects of different management practices of water resources on the economy of the Pirapama Riverbasin, especially the effects on the poorest strata of the population.This will be done by joining the hydro-economic model for this region already developed at the Federal University of Pernambuco (UFPE) with a Computable General Equilibrium Model (CGEM) being formulated for the same hydrographic region.

Starting from the results obtained from the first model, concerning water allocation for agricultural users and their resulting crop production, the effects on all sectors of the regional economy including possible changes in the condition of poor families will be measured . These results are expected to support decision-making about different allocation policies in the region.

The Pirapama River basin was mainly chosen as the area of study because of its economic importance for Pernambuco, since one hand is the most important water source for the metropolitan region of Recife, capital of Pernambuco and supplies water for others major users such as alcohol distilleries and sugar cane irrigation. Thus, there are already many existing conflicts between different uses in the region, such as electricity generation, irrigation, and human consumption.

Water quality is also a major concern in the Pirapama basin since throughout the length of the river most currently monitored water quality standards cannot be met, mostly because of sugarcane production together with fertirrigation, which is a process of irrigation and fertilization that uses water to carry and distribute fertilizers to the sugar cane. On top of that, two recently constructed reservoirs on the basin (the last one completed in 2010) might also contribute to further water quality deterioration through eutrophication processes (MORAES ET AL, 2010).

Furthermore, the region where the Pirapama River basin is located (Zona da Mata) is not associated with the climate variability and drought as the semi-arid regions in northeastern Brazil, therefore the basin is less used to extreme drought periods making it particularly vulnerable to future climate changes (ENGLE & LEMOS, 2010). These conditions make good water management practices in the region indispensable

Given the main goal highlighted above we have the following specific objectives:

• To build a Social Accounting Matrix for the Pirapama River basin;

• To develop and calibrate a CGEM for the Pirapama River basin with different types of representative families;

• To include the results from the hydro-economic model in the general equilibrium model;

• To simulate through the integrated framework how different decisions on water management might affect the Regional Economy, especially those areas with poorest population.