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This paper presents a linked hydro-economic model and uses it to examine the regional effects of water use regulations and product price changes on the agriculture of the São Francisco River Basin, Brazil. The effects of weather on surface water availability are explicitly addressed using the hydrological model MIKE-Basin. Farmers’ adjustments to changes in precipitation, surface water availability, and other factors are quantified using an economic model based on non-linear programming techniques. The models are externally linked. Results show that regional impacts, at the sub-basin level, vary depending on the location of each sub-basin relative to river flows. The effects of water use regulations and of exogenous price shocks on agriculture depend on weather, location, product mix and production technology. Implications of these results for policies designed to manage agriculture and water use are discussed. [ABSTRACT FROM AUTHOR]

This article uses a basin-wide hydrologic model to assess the hydrologic and economic effects of expanding agriculture in the Sao Francisco River Basin, Brazil. It then uses a basin-wide economic model of agriculture to examine the effects of implementing water use regulations. Preliminary results suggest that substantially expanding agriculture would put pressure on some of the river's environmental flows. Agricultural output and rural employment would increase, though not in spatially uniform ways. The economic model demonstrates how cropping area, crop mix and production technology respond simultaneously to water shortages. While farmers can adjust, the costs of doing so may be beyond the reach of resource-poor farmers. [ABSTRACT FROM AUTHOR]