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

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  • HUANG, QIUQIONG
  • ROZELLE, SCOTT
  • HOWITT, RICHARD
  • WANG, JINXIA
  • HUANG, JIKUN

Abstract

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.

Suggested Citation

  • 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.
    • Handle: RePEc:cup:endeec:v:15:y:2010:i:03:p:293-319_00
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    Cited by:

    1. Perrings, Charles, 2014. "Environment and development economics 20 years on," Environment and Development Economics, Cambridge University Press, vol. 19(3), pages 333-366, June.
    2. Jinxia Wang & Yunyun Zhu & Tianhe Sun & Jikun Huang & Lijuan Zhang & Baozhu Guan & Qiuqiong Huang, 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), pages 126-149, January.
    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. Wei Qu & Jing Yan & Yanmei Tan & Qin Tu, 2021. "Analysis on the Influencing Factors of Farmers’ Cognition on the Function of Agricultural Water Price—Taking Hexi Corridor as an Example," Sustainability, MDPI, vol. 13(9), pages 1-14, May.
    6. Paloch Suchato & Taro Mieno & Karina Schoengold & Timothy Foster, 2022. "The potential for moral hazard behavior in irrigation decisions under crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 53(2), pages 257-273, March.
    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. Soumya Balasubramanya & Nicholas Brozović & Ram Fishman & Sharachchandra Lele & Jinxia Wang, 2022. "Managing irrigation under increasing water scarcity," Agricultural Economics, International Association of Agricultural Economists, vol. 53(6), pages 976-984, November.
    9. Shen, Xiaobo & Lin, Boqiang, 2017. "The shadow prices and demand elasticities of agricultural water in China: A StoNED-based analysis," Resources, Conservation & Recycling, Elsevier, vol. 127(C), pages 21-28.
    10. Mohammad Ali Asaadi & Seyed Abolghasem Mortazavi & Omid Zamani & Gholam Hassan Najafi & Talal Yusaf & Seyed Salar Hoseini, 2019. "The Impacts of Water Pricing and Non-Pricing Policies on Sustainable Water Resources Management: A Case of Ghorveh Plain at Kurdistan Province, Iran," Energies, MDPI, vol. 12(14), pages 1-16, July.
    11. Christian Franco-Crespo & Jose Maria Sumpsi Viñas, 2017. "The Impact of Pricing Policies on Irrigation Water for Agro-Food Farms in Ecuador," Sustainability, MDPI, vol. 9(9), pages 1-18, August.
    12. 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.
    13. 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.
    14. Radmehr, Riza & Ghorbani, Mohammad & Ziaei, Ali Naghi, 2021. "Quantifying and managing the water-energy-food nexus in dry regions food insecurity: New methods and evidence," Agricultural Water Management, Elsevier, vol. 245(C).
    15. 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.
    16. 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.
    17. 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.
    18. 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.
    19. Zhou, Qing & Zhang, Yali & Wu, Feng, 2021. "Evaluation of the most proper management scale on water use efficiency and water productivity: A case study of the Heihe River Basin, China," Agricultural Water Management, Elsevier, vol. 246(C).
    20. Djiby Racine Thiam & Ariel Dinar & Hebert Ntuli, 2021. "Promotion of residential water conservation measures in South Africa: the role of water-saving equipment," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(1), pages 173-210, January.

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