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

Minjun Shi, Xiaojun Wang, Hong Yang and Tao Wang
Additional contact information
Minjun Shi: School of Management, University of Chinese Academy of Sciences, Beijing 100190, China
Xiaojun Wang: School of Management, University of 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

Sustainability, 2014, vol. 6, issue 11, 1-20

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.

Keywords: agricultural water use; bio-economic model; water demand management; water price control; water quota (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
https://www.mdpi.com/2071-1050/6/11/7601/pdf (application/pdf)
https://www.mdpi.com/2071-1050/6/11/7601/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:6:y:2014:i:11:p:7601-7620:d:41769

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().