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A Method to Optimize Gross Fixed Capital Investments for Water Conservancy in China

Author

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  • Cuihong Yang
  • Xikang Chen
  • Jian Xu

Abstract

A major concern of policymakers and researchers in China is finding an appropriate size of the gross fixed capital investments for water conservancy (GFCIWC). This paper determines the optimal proportion of GFCIWC to GDP. Unlike engineering economics, we investigate the benefits of GFCIWC at a macro-economic level, using the 1999 input-output table extended for water conservancy. Different kinds of impacts are induced by GFCIWC. These include forward benefits (flood control, water supply, irrigation, hydroelectric power, soil and water conservation, environmental protection) and backward benefits for GDP; negative social effects; and opportunity costs of GFCIWC. The results are put into a set of regression equations between total benefits of GFCIWC and the proportion of GFCIWC to GDP, from which the optimal proportion - or a desirable range - can be determined. The results may provide policymakers with guidelines for allocating investments.

Suggested Citation

  • Cuihong Yang & Xikang Chen & Jian Xu, 2008. "A Method to Optimize Gross Fixed Capital Investments for Water Conservancy in China," Economic Systems Research, Taylor & Francis Journals, vol. 20(2), pages 151-172.
    • Handle: RePEc:taf:ecsysr:v:20:y:2008:i:2:p:151-172
    DOI: 10.1080/09535310802075331
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    Citations

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    Cited by:

    1. Hongxia Zhang, 2009. "The Analysis of the Reasonable Structure of Water Conservancy Investment of Capital Construction in China by AHP Method," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 23(1), pages 1-18, January.
    2. Quanrun Chen & Erik Dietzenbacher & Bart Los, 2015. "Structural decomposition analyses: the differences between applying the semi-closed and the open input–output model," Environment and Planning A, , vol. 47(8), pages 1713-1735, August.
    3. Chen, Dan & Webber, Michael & Chen, Jing & Luo, Zhaohui, 2011. "Emergy evaluation perspectives of an irrigation improvement project proposal in China," Ecological Economics, Elsevier, vol. 70(11), pages 2154-2162, September.
    4. Chen, Quanrun & Dietzenbacher, Erik & Los, Bart & Yang, Cuihong, 2016. "Modeling the short-run effect of fiscal stimuli on GDP: A new semi-closed input–output model," Economic Modelling, Elsevier, vol. 58(C), pages 52-63.
    5. Anastasios Michailidis & Konstadinos Mattas & Irene Tzouramani & Diamantis Karamouzis, 2009. "A Socioeconomic Valuation of an Irrigation System Project Based on Real Option Analysis Approach," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 23(10), pages 1989-2001, August.

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