This article reviews the literature on the economics of farm animal welfare. It starts with the challenge of defining and measuring animal welfare. Subsequently, the demand for farm animal welfare is evaluated from both the citizens’ perspective and the consumers’ perspective. The much-cited preference gap in between these perspectives constitutes a dilemma for the governance of animal welfare. Literature on the supply of farm animal welfare discusses the implications of enhancing farm animal welfare for production cost. The linkages between farm structure, farm technology, and animal welfare are discussed, and the frequently voiced hypothesis that smaller and more traditional farms automatically imply higher farm animal welfare levels is rejected. We examine the central challenge to the governance of farm animal welfare: its effects on competitiveness and trade. We also discuss objectives, governance instruments, the interplay of different policy instruments, and how to combine them for an effective and efficient strategy for farm animal welfare.

Water scarcity is an increasing problem in many parts of the world and the management of water has become an important issue on the political economy agenda in many countries. As water is used in most economic activities and the allocation of water is often a complex problem involving different economic agents and sectors, Computable General Equilibrium (CGE) models have been proven useful to analyze water allocation problems, although their adaptation to include water is still relatively undeveloped. This paper provides a description of an integrated water-focused CGE model (STAGE_W) that includes multiple types and uses of water, and for the first time, the reclamation of wastewater as well as the provision of brackish groundwater as separate, independent activities with specific cost structures. The insights provided by the model are illustrated with an application to the Israeli water sector assuming that freshwater resources available to the economy are cut by 50%. We analyze how the Israeli economy copes with this shock if it reduces potable water supply compared with further investments in the desalination sector. The results demonstrate that the effects on the economy are slightly negative under both scenarios. Counter intuitively, the provision of additional potable water to the economy through desalination does not substantively reduce the negative outcomes. This is mainly due to the high costs of desalination, which are currently subsidized, with the distribution of the negative welfare effect over household groups dependent on how these subsidies are financed.