Economic Impacts of Total Water Use Control in the Heihe River Basin in Northwestern China—An Integrated CGE-BEM Modeling Approach

Na Li, Xiaojun Wang, Minjun Shi and Hong Yang
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Na Li: 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
Minjun Shi: 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, 8600 Duebendorf, Switzerland

Sustainability, 2015, vol. 7, issue 3, 1-19

Abstract: This paper develops an integrated modeling approach combined with a top-down dynamic computable general equilibrium (CGE) model and a bottom-up bio-economic model (BEM) to study the economic impact of a total water use control policy in the Heihe river basin, northwestern China. The integrated CGE-BEM model is regionally disaggregated with a variety of crops and livestock, and includes the responses of farmers and consequent feedback effects in the regional economic system. The results show that under the total water use control scenario, the water use structure is changed and water use efficiency is improved. The total water use control policy has limited negative impact on the regional economic growth with only a slightly lower growth rate of 13.38% compared with a growth rate of 14% by 2020 under a business as usual water use scenario. However, the total water use control policy has significant negative impacts on several sectors, especially agriculture and food processing. It is expected cropping systems will change through a replacement of water-intensive crops with water-efficient crops. Farmers’ incomes will decrease by 3.14%. In order to alleviate farmers’ income loss and deal with water use conflicts across different sectors and regions, the promotion of migration of surplus labor from agriculture to non-agricultural sectors and the improvement of water use efficiency in agriculture are needed.

Keywords: total water use control; computable general equilibrium model; bio-economic model; Heihe river basin; Zhangye (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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