IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v11y2019i9p2529-d227555.html
   My bibliography  Save this article

Designing Optimum Water-Saving Policy in China Using Quantity and Price Control Mechanisms

Author

Listed:
  • Khampheng Boudmyxay

    (Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing 100101, China
    University of Chinese Academy of Sciences, Beijing 100049, China
    Laos-China Joint Research Center for Resources and Environment, Vientiane Capital 7864, Lao PDR)

  • Shuai Zhong

    (Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing 100101, China
    University of Chinese Academy of Sciences, Beijing 100049, China
    Laos-China Joint Research Center for Resources and Environment, Vientiane Capital 7864, Lao PDR
    Key Laboratory of Carrying Capacity Assessment for Resource and Environment, Ministry of Natural Resources, Beijing 100101, China)

  • Lei Shen

    (Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing 100101, China
    University of Chinese Academy of Sciences, Beijing 100049, China
    Laos-China Joint Research Center for Resources and Environment, Vientiane Capital 7864, Lao PDR
    Key Laboratory of Carrying Capacity Assessment for Resource and Environment, Ministry of Natural Resources, Beijing 100101, China)

Abstract

In an attempt to alleviate water scarcity, the government of China has introduced a water plan for the year 2030. Based on a dynamic computable general equilibrium model, this paper investigates how conservation of irrigation water, grain production, and the welfare of rural households will be affected by planned reductions to the irrigation water subsidy between 2018 and 2030. Four policy instruments, namely quantitative control (QC), quantitative control with a subsidy reduction (QC-SR), price control (PC), and price control with a subsidy reduction (PC-SR) are employed in the model. Most existing research has found that reducing the irrigation subsidy will lead to significant negative impacts to the agricultural economy, and especially to rural households. These predicted negative impacts are a barrier to agricultural water policy pricing reform. However, the results of this research show that a provincial subsidy reduction to 1% between 2018 and 2030 will have an insignificant impact on agricultural production as well as rural household incomes and welfare, despite the subsidy rate currently accounting for more than 90% of the total irrigation value at the macro level in most provinces. Furthermore, PC will create a demand for irrigation water, which is predicted to rise to more than five times the agricultural water planning level currently set for 2030, and PC-SR will not achieve the agricultural water planning goal.

Suggested Citation

  • Khampheng Boudmyxay & Shuai Zhong & Lei Shen, 2019. "Designing Optimum Water-Saving Policy in China Using Quantity and Price Control Mechanisms," Sustainability, MDPI, vol. 11(9), pages 1-20, May.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:9:p:2529-:d:227555
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/11/9/2529/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/11/9/2529/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Maria Berrittella & Katrin Rehdanz & Richard S.J. Tol, 2006. "The Economic Impact of the South-North Water Transfer Project in China: A Computable General Equilibrium Analysis," Working Papers 2006.154, Fondazione Eni Enrico Mattei.
    2. D. Latinopoulos, 2008. "Estimating the Potential Impacts of Irrigation Water Pricing Using Multicriteria Decision Making Modelling. An Application to Northern Greece," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 22(12), pages 1761-1782, December.
    3. Huang, Qiuqiong & Rozelle, Scott & Howitt, Richard & Wang, Jinxia & Huang, Jikun, 2010. "Irrigation water demand and implications for water pricing policy in rural China," Environment and Development Economics, Cambridge University Press, vol. 15(3), pages 293-319, June.
    4. Yang, Hong & Zhang, Xiaohe & Zehnder, Alexander J. B., 2003. "Water scarcity, pricing mechanism and institutional reform in northern China irrigated agriculture," Agricultural Water Management, Elsevier, vol. 61(2), pages 143-161, June.
    5. Deng, Xi-Ping & Shan, Lun & Zhang, Heping & Turner, Neil C., 2006. "Improving agricultural water use efficiency in arid and semiarid areas of China," Agricultural Water Management, Elsevier, vol. 80(1-3), pages 23-40, February.
    6. Eefje Aarnoudse & Wei Qu & Bettina Bluemling & Thomas Herzfeld, 2017. "Groundwater quota versus tiered groundwater pricing: two cases of groundwater management in north-west China," International Journal of Water Resources Development, Taylor & Francis Journals, vol. 33(6), pages 917-934, November.
    7. Lohmar, Bryan & Wang, Jinxia & Rozelle, Scott & Huang, Jikun & Dawe, David, 2003. "China'S Agricultural Water Policy Reforms: Increasing Investment, Resolving Conflicts, And Revising Incentives," Agricultural Information Bulletins 33643, United States Department of Agriculture, Economic Research Service.
    8. Huang, Qiuqiong & Wang, Jinxia & Easter, K. William & Rozelle, Scott, 2010. "Empirical assessment of water management institutions in northern China," Agricultural Water Management, Elsevier, vol. 98(2), pages 361-369, December.
    9. Mitsuru Okiyama & Suminori Tokunaga, 2010. "Impact Of Expanding Bio‐Fuel Consumption On Household Income Of Farmers In Thailand: Utilizing The Computable General Equilibrium Model," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 22(2‐3), pages 109-142, July.
    10. Minjun Shi & Xiaojun Wang & Hong Yang & Tao Wang, 2014. "Pricing or Quota? A Solution to Water Scarcity in Oasis Regions in China: A Case Study in the Heihe River Basin," Sustainability, MDPI, vol. 6(11), pages 1-20, October.
    11. Ge, Jianping & Lei, Yalin & Tokunaga, Suminori, 2014. "Non-grain fuel ethanol expansion and its effects on food security: A computable general equilibrium analysis for China," Energy, Elsevier, vol. 65(C), pages 346-356.
    12. Changbo Qin & Z.(Bob) Su & Hans Th.A. Bressers & Yangwen Jia & Hao Wang, 2013. "Assessing the economic impact of North China's water scarcity mitigation strategy: a multi-region, water-extended computable general equilibrium analysis," Water International, Taylor & Francis Journals, vol. 38(6), pages 701-723, October.
    13. Qu, Futian & Kuyvenhoven, Arie & Shi, Xiaoping & Heerink, Nico, 2011. "Sustainable natural resource use in rural China: Recent trends and policies," China Economic Review, Elsevier, vol. 22(4), pages 444-460.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ali Aljamal & Mark Speece & Mohsen Bagnied, 2020. "Sustainable Policy for Water Pricing in Kuwait," Sustainability, MDPI, vol. 12(8), pages 1-18, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Calzadilla, Alvaro & Rehdanz, Katrin & Tol, Richard S.J., 2008. "Water scarcity and the impact of improved irrigation management: A CGE analysis," Conference papers 331788, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Feike, Til & Henseler, Martin, 2017. "Multiple Policy Instruments for Sustainable Water Management in Crop Production - A Modeling Study for the Chinese Aksu-Tarim Region," Ecological Economics, Elsevier, vol. 135(C), pages 42-54.
    3. Palatnik, Ruslana & Shechter, Mordechai, 2008. "Can Climate Change Mitigation Policy be Beneficial for the Israeli Economy? A Computable General Equilibrium Analysis," Conference papers 331792, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Wang, Jinxia & Zhu, Yunyun & Sun, Tianhe & Huang, Jikun & Zhang, Lijuan & Guan, Baozhu & Huang, Qiuqiong, 2020. "Forty years of irrigation development and reform in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(1), January.
    5. Alvaro Calzadilla & Katrin Rehdanz & Richard S.J. Tol, 2008. "The Eonomic Impact Of More Sustainable Water Use In Agriculture: A Computable General Equilibrium Analysis," Working Papers FNU-169, Research unit Sustainability and Global Change, Hamburg University, revised Dec 2008.
    6. Zhang, Lei & Heerink, Nico & Dries, Liesbeth & Shi, Xiaoping, 2013. "Water users associations and irrigation water productivity in northern China," Ecological Economics, Elsevier, vol. 95(C), pages 128-136.
    7. Jianjun Tang & Henk Folmer & Arno J. Vlist & Jianhong Xue, 2014. "The impacts of management reform on irrigation water use efficiency in the Guanzhong plain, China," Papers in Regional Science, Wiley Blackwell, vol. 93(2), pages 455-475, June.
    8. Zhang, Lei & Zhu, Xueqin & Heerink, Nico & Shi, Xiaoping, 2014. "Does output market development affect irrigation water institutions? Insights from a case study in northern China," Agricultural Water Management, Elsevier, vol. 131(C), pages 70-78.
    9. Minjun Shi & Xiaojun Wang & Hong Yang & Tao Wang, 2014. "Pricing or Quota? A Solution to Water Scarcity in Oasis Regions in China: A Case Study in the Heihe River Basin," Sustainability, MDPI, vol. 6(11), pages 1-20, October.
    10. Morey Burnham & Zhao Ma & Delan Zhu, 2015. "The human dimensions of water saving irrigation: lessons learned from Chinese smallholder farmers," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 32(2), pages 347-360, June.
    11. Yiyu Feng & Ming Chang & Erga Luo & Jing Liu, 2023. "Has Property Rights Reform of China’s Farmland Water Facilities Improved Farmers’ Irrigation Efficiency?—Evidence from a Typical Reform Pilot in China’s Yunnan Province," Agriculture, MDPI, vol. 13(2), pages 1-27, January.
    12. Fang, Q.X. & Ma, L. & Green, T.R. & Yu, Q. & Wang, T.D. & Ahuja, L.R., 2010. "Water resources and water use efficiency in the North China Plain: Current status and agronomic management options," Agricultural Water Management, Elsevier, vol. 97(8), pages 1102-1116, August.
    13. Jian Xie, 2009. "Addressing China's Water Scarcity : Recommendations for Selected Water Resource Management Issues," World Bank Publications - Books, The World Bank Group, number 2585, December.
    14. Wang, Tong & Park, Seong & Jin, Hailong, 2016. "Will Farmers Save Water? A Theoretical Analysis of Groundwater Conservation Policies for Ogallala Aquifer," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229904, Southern Agricultural Economics Association.
    15. Elizondo, Alejandra & Boyd, Roy, 2017. "Economic impact of ethanol promotion in Mexico: A general equilibrium analysis," Energy Policy, Elsevier, vol. 101(C), pages 293-301.
    16. Zhang, Biao & Fu, Zetian & Wang, Jieqiong & Zhang, Lingxian, 2019. "Farmers’ adoption of water-saving irrigation technology alleviates water scarcity in metropolis suburbs: A case study of Beijing, China," Agricultural Water Management, Elsevier, vol. 212(C), pages 349-357.
    17. Yu Liu & Xiaohong Hu & Qian Zhang & Mingbo Zheng, 2017. "Improving Agricultural Water Use Efficiency: A Quantitative Study of Zhangye City Using the Static CGE Model with a CES Water−Land Resources Account," Sustainability, MDPI, vol. 9(2), pages 1-15, February.
    18. Zhang, Lei & Heerink, Nico & Dries, Liesbeth & Qu, Futian, 2012. "Water users associations and agricultural water use efficiency in northern China," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 125214, International Association of Agricultural Economists.
    19. Hefa Cheng & Yuanan Hu, 2012. "Improving China’s water resources management for better adaptation to climate change," Climatic Change, Springer, vol. 112(2), pages 253-282, May.
    20. Yuanjie Li & Zhuoying Zhang & Minjun Shi, 2019. "Restrictive Effects of Water Scarcity on Urban Economic Development in the Beijing-Tianjin-Hebei City Region," Sustainability, MDPI, vol. 11(8), pages 1-23, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:11:y:2019:i:9:p:2529-:d:227555. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.