Can Water Price Improve Water Productivity? A Water-Economic-Model-Based Study in Heihe River Basin, China
Abstract
:1. Introduction
2. Study Area
3. Model and Methodology
3.1. Framework of the Water-Economic Model
3.2. Substitution Elasticity between Water and Land
3.3. Price Elasticity of Agricultural Water Demand
4. Results and Discussion
4.1. Estimation of Agricultural Water Price Elasticity
4.2. Estimation of the Elasticity of Substitution of Water and Land
4.3. Simulation of the Impact of Water Price Change on Economic Development
4.4. Impact of Water Price Change on Water Productivity
4.5. System Sensitivity Analysis
5. Conclusions and Policy Implications
Author Contributions
Funding
Conflicts of Interest
Appendix A
Abbreviation | Sectors | Surface Water | Groundwater | “Other” Water |
---|---|---|---|---|
WHEAT | Wheat | 3777.56 | 1834.66 | 44.20 |
CORN | Corn | 12,540.53 | 5242.57 | 545.72 |
Oilseed | Oilseed | 162.60 | 62.61 | 1.05 |
Cotton | Cotton | 1360.41 | 679.67 | 4.15 |
Fruits | Fruits | 4071.27 | 1397.99 | 158.00 |
Vegetables | Vegetables | 6479.26 | 2699.53 | 224.08 |
OtherAg | “Other” agriculture | 562.30 | 177.51 | 3.83 |
CoalMineProc | Coal mining and washing | 0 | 0 | 0 |
CrudeOilGas | Oil and gas extraction | 0 | 0 | 0 |
FerrOre | Metal mining and dressing | 0 | 0 | 0 |
NFerrOre | Non-metallic mining and dressing | 0 | 123.58 | 2.23 |
FoodTobacco | Food manufacturing and tobacco processing | 0 | 111.46 | 14.01 |
Textil | Textiles | 0 | 0 | 0 |
ClothesShoes | Clothing, leather, and its products | 0 | 0 | 0 |
Furniture | Wood processing and furniture manufacturing | 0 | 2.69 | 0.11 |
CultureGoods | Paper printing and stationery manufacturing | 0 | 0 | 0 |
PetrolRef | Petroleum processing, coking, and nuclear fuel processing | 0 | 0 | 39.30 |
Chemistry | Chemical industry | 0 | 0.57 | 0.15 |
NMtlMinPr | Non-metallic mineral products | 0 | 7.76 | 0.44 |
MSmeltProc | Metal smelting and calendering | 0 | 0 | 0 |
Mprod | Metal products | 0 | 0 | 0 |
GeSplEqpNEC | General and special equipment manufacturing | 0 | 0 | 0 |
TransEqp | Transportation equipment manufacturing | 0 | 0 | 0 |
ElctronEqp | Electrical, mechanical, and equipment manufacturing | 0 | 0 | 0 |
OthElecEqp | Computer and communication equipment manufacturing | 0 | 0 | 0 |
OfficeEqp | Instrument and machinery manufacturing | 0 | 0 | 0 |
ArtsCrafts | Other manufacturing | 0 | 0 | 0 |
Scrap | Scrap products | 0 | 0 | 0 |
ElecSteam | Production and supply of electricity and steam | 0 | 3.02 | 17.18 |
GasSupply | Gas production and supply | 0 | 0 | 0 |
WaterSupply | Water production and supply | 76.25 | 284.44 | 0.74 |
Construction | Construction | 0 | 0.50 | 4.10 |
TransWare | Transportation and warehousing | 0 | 0.12 | 0.27 |
Post | Postal industry | 0 | 0 | 0 |
ComputSrvc | Information transmission, computer services, and software | 0 | 0 | 0.10 |
Trade | Wholesale and retail trade | 0 | 0 | 0.11 |
Hotels | Accommodation and catering | 0 | 0.19 | 3.44 |
Finance | Finance and insurance | 0 | 0 | 0.24 |
RealEstate | Real estate | 0 | 0 | 0.01 |
Leasing | Leasing and business services | 0 | 0 | 0.32 |
Tourism | Tourism | 0 | 0 | 0 |
TechSrvc | Scientific research | 0 | 0.04 | 0.01 |
PublicSrvc | Public service | 0 | 1.36 | 5.44 |
ResidentSrvc | Other social services | 0 | 0 | 0.14 |
Education | Education | 0 | 6.33 | 5.54 |
SocWelfare | Health, social security, and social welfare | 0 | 10.69 | 4.12 |
ArtsFilmTV | Culture, sports, and entertainment | 0 | 0 | 0.13 |
PublicAdmin | Public administration and social organisation | 0 | 0.04 | 0.89 |
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Price Interval | Surface Water | Groundwater | Irrigated with Both Surface Water and Groundwater | |||
---|---|---|---|---|---|---|
Water Price | Amount | Water Price | Amount | Water Price | Amount | |
(CNY/m³) | (m³/Mu) | (CNY/m³) | (m³/Mu) | (CNY/m³) | (m³/Mu) | |
Seed maize | ||||||
Mean | 0.12 | 724 | 0.11 | 430 | 0.12 | 810 |
1–25% | 0.07 | 702 | 0.07 | 350 | 0.06 | 880 |
26–50% | 0.1 | 790 | 0.12 | 560 | 0.11 | 838 |
51–75% | 0.14 | 744 | 0.33 | 540 | 0.14 | 761 |
76–100% | 0.21 | 551 | 0.5 | 240 | 0.22 | 630 |
Wheat | ||||||
Mean | 0.19 | 445 | 0.29 | 389 | 0.21 | 508 |
1–25% | 0.08 | 610 | 0.08 | 540 | 0.08 | 696 |
26–50% | 0.11 | 516 | 0.1 | 480 | 0.11 | 671 |
51–75% | 0.14 | 500 | 0.22 | 400 | 0.14 | 483 |
76–100% | 0.36 | 253 | 0.5 | 294 | 0.36 | 343 |
All crops | ||||||
Mean | 0.15 | 580 | 0.22 | 570 | 0.16 | 667 |
1–25% | 0.08 | 666 | 0.08 | 515 | 0.07 | 783 |
26–50% | 0.1 | 681 | 0.12 | 791 | 0.11 | 796 |
51–75% | 0.14 | 625 | 0.18 | 605 | 0.15 | 621 |
76–100% | 0.3 | 345 | 0.55 | 397 | 0.31 | 469 |
Independent Variables | Dependent Variables |
---|---|
Ln Water | |
Ln water_price | −0.260 *** |
(0.00996) | |
Ln seed | −0.215 *** |
(0.0717) | |
Ln seed_price | 0.190 * |
(0.121) | |
Ln fertilizer_price | −0.146 |
(0.177) | |
Ln dist_water | 0.000160 * |
(8.57 × 10−5) | |
Ln area | 0.00365 ** |
(0.00524) | |
Affected by natural disaster or not | −0.00462 |
(0.0707) | |
Drought resistant or not | 0.0652 |
(0.125) | |
Canal lining or not | 0.211 * |
(0.110) | |
Constant | 6.395 *** |
(0.424) | |
Samples | 204 |
R-squared | 0.306 |
Main Economic Indicators | Change (%) | Main Input Factors | Change (%) |
---|---|---|---|
GDP | −1.66 | Total water demand | −10.2 |
Investment | 0.07 | Surface water demand | −7.11 |
Consumption of goods | −1.45 | Groundwater demand | −16.34 |
Exports to other regions | −0.66 | Other water demand | −5.23 |
Imports from other regions | −0.11 | Nominal wage | −0.073 |
Consumer purchase index(CPI) | 0.008 | Price of Capital | 0.06 |
Employment | −0.73 | Land rent | −13.10 |
Variable | Household Consumption | Investment | Exports | Imports | CPI | RealGDP | Stock of the Capital |
---|---|---|---|---|---|---|---|
Average change (%) | −0.06 | −0.08 | −0.44 | 0.11 | 0.07 | −0.20 | −0.18 |
Standard error | 0.004 | 0.003 | 0.005 | 0.003 | 0.001 | 0.008 | 0.002 |
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Zhou, Q.; Zhang, Y.; Wu, F. Can Water Price Improve Water Productivity? A Water-Economic-Model-Based Study in Heihe River Basin, China. Sustainability 2022, 14, 6224. https://doi.org/10.3390/su14106224
Zhou Q, Zhang Y, Wu F. Can Water Price Improve Water Productivity? A Water-Economic-Model-Based Study in Heihe River Basin, China. Sustainability. 2022; 14(10):6224. https://doi.org/10.3390/su14106224
Chicago/Turabian StyleZhou, Qing, Yali Zhang, and Feng Wu. 2022. "Can Water Price Improve Water Productivity? A Water-Economic-Model-Based Study in Heihe River Basin, China" Sustainability 14, no. 10: 6224. https://doi.org/10.3390/su14106224