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Pricing or Quota? A Solution to Water Scarcity in Oasis Regions in China: A Case Study in the Heihe River Basin

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  • Minjun Shi

    () (School of Management, University of Chinese Academy of Sciences, Beijing 100190, China
    Research Centre on Fictitious Economy & Data Science, Chinese Academy of Sciences, Beijing 100190, China)

  • Xiaojun Wang

    () (School of Management, University of Chinese Academy of Sciences, Beijing 100190, China
    Research Centre on Fictitious Economy & Data Science, Chinese Academy of Sciences, Beijing 100190, China)

  • Hong Yang

    () (Swiss Federal institute for Aquatic Science and Technology (Eawag), Ueberlandstrasse 133, Duebendorf 8600, Switzerland)

  • Tao Wang

    () (Cold and Arid Regions Environmental and Engineering Research Institute, Chinese Academy of Sciences, Lanzhou 730000, China)

Abstract

The conflict between increasing water demand and limited water resources has become a serious threat to oasis regions in China. Solutions to water scarcity have to curb overall water demands, especially reducing agricultural water use. Price control and quantitative control are the two most commonly applied policy instruments for water demand management. This paper used a bio-economic model (BEM) to examine the shadow price of water resources and to investigate farmers’ response to water demand management policies in water scarce regions based on a study in the Heihe River Basin in northwest China. The results indicate that farmers are not very responsive to changes in water price, because it is currently far below the shadow price of water resources in most irrigation zones. A reduction of agricultural water demand could occur only with a large rise in the water price. In comparison, a quantitative control measure is more effective at reducing water use. Concerning the effects on farm income, a price control will cost much more than a quantitative control to save the same volume of water. Hence, a water quota is a more suitable choice for the purpose of reducing agricultural water use, while minimizing farm income loss in the region of this case study.

Suggested Citation

  • 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.
  • Handle: RePEc:gam:jsusta:v:6:y:2014:i:11:p:7601-7620:d:41769
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Haijing Zhang & Qingyun Du & Min Yao & Fu Ren, 2016. "Evaluation and Clustering Maps of Groundwater Wells in the Red Beds of Chengdu, Sichuan, China," Sustainability, MDPI, Open Access Journal, vol. 8(1), pages 1-21, January.
    2. Hailiang Ma & Chenling Shi & Nan-Ting Chou, 2016. "China’s Water Utilization Efficiency: An Analysis with Environmental Considerations," Sustainability, MDPI, Open Access Journal, vol. 8(6), pages 1-15, May.
    3. Gou, Fang & Yin, Wen & Hong, Yu & van der Werf, Wopke & Chai, Qiang & Heerink, Nico & van Ittersum, Martin K., 2017. "On yield gaps and yield gains in intercropping: Opportunities for increasing grain production in northwest China," Agricultural Systems, Elsevier, vol. 151(C), pages 96-105.
    4. repec:gam:jsusta:v:8:y:2016:i:1:p:87:d:62364 is not listed on IDEAS
    5. Na Li & Xiaojun Wang & Minjun Shi & Hong Yang, 2015. "Economic Impacts of Total Water Use Control in the Heihe River Basin in Northwestern China—An Integrated CGE-BEM Modeling Approach," Sustainability, MDPI, Open Access Journal, vol. 7(3), pages 1-19, March.
    6. 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.
    7. 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, Open Access Journal, vol. 9(2), pages 1-15, February.
    8. repec:gam:jsusta:v:9:y:2017:i:10:p:1796-:d:114062 is not listed on IDEAS
    9. Heng Yi Teah & Tomohiro Akiyama & Ricardo San Carlos & Orlando Vargas Rayo & Yu Ting Joanne Khew & Sijia Zhao & Lingfeng Zheng & Motoharu Onuki, 2016. "Assessment of Downscaling Planetary Boundaries to Semi-Arid Ecosystems with a Local Perception: A Case Study in the Middle Reaches of Heihe River," Sustainability, MDPI, Open Access Journal, vol. 8(12), pages 1-11, November.

    More about this item

    Keywords

    agricultural water use; bio-economic model; water demand management; water price control; water quota;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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