Decomposing Irrigation Water Use Changes in Equilibrium Models

This paper measures the importance of different drivers of change in irrigation water use regionally and globally. We followed Heckscher–Ohlin theory, Ricardian specific-factor model, and Melitz-type theories of trade to introduce a method for decomposing irrigated water use. We apply the decomposition method on the results of Liu et al. (2014) on the impacts of future irrigation shortfalls. We find that rain fed substitution (specific-factor impact) contributes to 62% of change in water use; substitution to non-crops (Heckscher–Ohlin impact) accounts for 16% of the change; and moving to farms with higher water productivity (Melitz impact) contributes to 7% of it, globally. The importance of drivers varies by region but usually these three drivers are the most important factors in adaptation to water shocks