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Water 2018, 10(1), 19; https://doi.org/10.3390/w10010019

Estimation of Irrigation Water Demand and Economic Returns of Water in Zhangye Basin

1
Collaborative Innovation Center for Beijing-Tianjin-Hebei Integrated Development, Hebei University of Economics and Business, Shijiazhuang 050061, China
2
Department of Agricultural Economics and Agribusiness, University of Arkansas, Fayetteville, AR 72701, USA
3
China Center for Agricultural Policy, School of Advanced Agricultural Sciences, Peking University, No 5, Yiheyuan Road, Haidian District, Beijing 100871, China
*
Author to whom correspondence should be addressed.
Received: 31 August 2017 / Revised: 5 December 2017 / Accepted: 20 December 2017 / Published: 26 December 2017
(This article belongs to the Special Issue Sustainable Water Management within Inland River Watershed)
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Abstract

The objective of this study is to provide estimates of price elasticities of irrigation water demands in Zhangye Basin (ZB), an inland river basin in China, with the most recent data and to compare the values of marginal product (VMPs) of water to the prices of water farmers are currently paying. With a set of village and household survey data collected in 2009 and 2014, household fixed effects models are used to estimate water demand and crop production functions. The estimation results are then used to estimate price elasticities and VMPs. Results show that demands for surface water, groundwater, and conjunctive irrigation water are all in the inelastic range. The results imply that water prices may need to be increased significantly to induce sizable water savings. Another significant finding is that for a large share of the sample households, VMPs of water are higher than the prices of water. The estimated VMPs provide policy makers with some guidelines on the minimum level of water prices required to achieve any water savings among those households. View Full-Text
Keywords: surface water; groundwater; conjunctive irrigation; price elasticity; value of marginal product of water; Zhangye Basin; Heihe River Basin surface water; groundwater; conjunctive irrigation; price elasticity; value of marginal product of water; Zhangye Basin; Heihe River Basin
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).
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Sun, T.; Huang, Q.; Wang, J. Estimation of Irrigation Water Demand and Economic Returns of Water in Zhangye Basin. Water 2018, 10, 19.

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