The Economic Impacts of Water Shortage During a Drought in Korea: Using Intraregional I-O Analysis

In an effort to analyze the economic impacts of water shortage, the 2003 intraregional input output model published in 2007 by the Bank of Korea was used. In particular, the outbreak of droughts is regionally characterized, thereby resulting in different damages regionally. Priority input and output factors will differ regionally. Thus, analyzing water shortage by using intraregional input output will provide more specific and effective information than using a nationwide input and output on water supply distribution. Notably, in the previous measurement of regional water shortage costs, a regional input-output analysis was indirectly conducted using a nationwide input output analysis. This method is lacking in reliability because it may offer a great margin of error according to methodologies. This research, however, used the 2003 survey-based intraregional input output analysis conducted by the Bank of Korea, thereby boosting its reliability. As a result of estimation, Korea's tap water industry was found to be a self-supply type industry with greater ripple effects intraregionally than interregionally. The forward and backward linkage effects were all found to be nearly more than 1 in all regions, and the region with the greatest backward effect was found to be the Gyeongsangnam province. A water shortage worth 10,000 won in the Seoul metropolitan area and the Gyeongsangnam province was found to create industrial damage costs of 1.3 million won and 570,000 won, respectively.