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Irrigation water demand and implications for water pricing policy in rural China




The goal of this paper is to analyze whether reforming groundwater pricing has the potential to encourage water conservation and assess its impacts on crop production and producer income in rural China. Household-level water demands are estimated so that adjustments at both the intensive and extensive margins are captured. The results show that a large gap exists between the cost of water and the value of water to producers. Simulation analysis shows that reforming water pricing can induce water savings. However, the price of water needs to be raised to a relatively high level. We also find that the value-based policy is more effective than the cost-based policy since it generates larger water savings, given the same increase in the average price of water. While raising the price of water negatively affects crop production and crop income, higher water prices do not adversely affect the distribution of household income.

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  • 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(03), pages 293-319, June.
  • Handle: RePEc:cup:endeec:v:15:y:2010:i:03:p:293-319_00

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    Cited by:

    1. 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, Open Access Journal, vol. 6(11), pages 1-20, October.
    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. Yan, Tingting & Wang, Jinxia & Huang, Jikun, 2015. "Urbanization, agricultural water use, and regional and national crop production in China," Ecological Modelling, Elsevier, vol. 318(C), pages 226-235.
    4. Tang, Jianjun & Folmer, Henk & Xue, Jianhong, 2015. "Technical and allocative efficiency of irrigation water use in the Guanzhong Plain, China," Food Policy, Elsevier, vol. 50(C), pages 43-52.
    5. repec:gam:jsusta:v:9:y:2017:i:9:p:1515-:d:109866 is not listed on IDEAS
    6. 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.
    7. Shanxia Sun & Juan P. Sesmero & Karina Schoengold, 2016. "The role of common pool problems in irrigation inefficiency: a case study in groundwater pumping in Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 47(1), pages 117-127, January.
    8. Perrings, Charles, 2014. "Environment and development economics 20 years on," Environment and Development Economics, Cambridge University Press, vol. 19(03), pages 333-366, June.
    9. 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.

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