Using a mixed input-output model, this study examines potential changes in sector output and water requirements in Macedonia arising from climate change. By defining three climate change scenarios and exogenously specifying the warming shocks for five key agricultural sub-sectors, the effects on the economy were quantified. The results indicated that except for cereals and grapes, agricultural production would benefit from the low climate change scenario due to moderate changes in precipitation and temperature and longer cropping period, while there would be negligible effects on the rest of the economy. Contrary, the medium and high climate change scenarios would negatively affect agriculture due to increase in temperature and decline in precipitation, with severe losses in grape, apple and cereal production, but again with low effects on other economic sectors. As a result, water consumption by agriculture sector will increase by around 6% in the low climate change scenario, and decrease by around 8% and 16% in the medium and high climate change scenarios, respectively, relative to the current agriculture water consumption. Capital investment in irrigation equipment could mitigate the negative climate change impacts in the medium and high climate change scenarios. However, it would impose additional stresses on the existing limited water resource over time.
