Impact of water price reform on water conservation and economic growth in China

Jing Zhao, Hongzhen Ni, Xiujian Peng, Jifeng Li, Genfa Chen and Jinhua Liu

Economic Analysis and Policy, 2016, vol. 51, issue C, 90-103

Abstract: Water pricing has been used as an effective method of conserving water and optimizing water allocation. However, little is known about how to set a rational and efficient water price and how water pricing impacts economic growth. In this paper, we address this challenge by using the SICGE model, a dynamic general equilibrium model for China that is augmented by a total water constraint module. We also include a water subdivision module that allows for substitution between various water sources. These extensions facilitate a comprehensive estimate of the impact that various water price reforms have on water conservation and economic growth. The modeling results confirm that an increase in the water price will lead to a decline in total water usage, a better water use structure, and enhanced water use efficiency. We conclude with a comparison of multiple scenarios that suggests an optimal water price system.

Keywords: Water price reform; CGE model; Water subdivision module; Water conservation; Economic impact (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:51:y:2016:i:c:p:90-103

DOI: 10.1016/j.eap.2016.06.003

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