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

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Listed:
  • Zhao, Jing
  • Ni, Hongzhen
  • Peng, Xiujian
  • Li, Jifeng
  • Chen, Genfa
  • Liu, Jinhua

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.

Suggested Citation

  • Zhao, Jing & Ni, Hongzhen & Peng, Xiujian & Li, Jifeng & Chen, Genfa & Liu, Jinhua, 2016. "Impact of water price reform on water conservation and economic growth in China," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 90-103.
    • Handle: RePEc:eee:ecanpo:v:51:y:2016:i:c:p:90-103
    DOI: 10.1016/j.eap.2016.06.003
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    Cited by:

    1. Hanzhang Zhou & Jinghao Zhang & Shibo Cui & Jianshi Zhao, 2023. "Modeling Hydrologic–Economic Interactions for Sustainable Development: A Case Study in Inner Mongolia, China," Sustainability, MDPI, vol. 16(1), pages 1-30, December.
    2. Zheng, Jiajia & Kamal, Muhammad Abdul, 2020. "The effect of household income on residential wastewater output: Evidence from urban China," Utilities Policy, Elsevier, vol. 63(C).
    3. Yuanjie Li & Zhuoying Zhang & Minjun Shi, 2019. "Restrictive Effects of Water Scarcity on Urban Economic Development in the Beijing-Tianjin-Hebei City Region," Sustainability, MDPI, vol. 11(8), pages 1-23, April.
    4. Teotónio, Carla & Rodríguez, Miguel & Roebeling, Peter & Fortes, Patrícia, 2020. "Water competition through the ‘water-energy’ nexus: Assessing the economic impacts of climate change in a Mediterranean context," Energy Economics, Elsevier, vol. 85(C).
    5. Darshana Rajapaksa & Robert Gifford & Benno Torgler & María A. García-Valiñas & Wasantha Athukorala & Shunsuke Managi & Clevo Wilson, 2019. "Do monetary and non-monetary incentives influence environmental attitudes and behavior? Evidence from an experimental analysis," Post-Print hal-03191523, HAL.
    6. Yao, Peng & Wang, Yutong & Liu, Jianxu, 2023. "Can water pollution control influence employment adjustment in enterprises?," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 384-397.
    7. Shyama Ratnasiri & Clevo Wilson & Wasantha Athukorala & Maria A. Garcia-Valiñas & Benno Torgler & Robert Gifford, 2018. "Effectiveness of two pricing structures on urban water use and conservation: a quasi-experimental investigation," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(3), pages 547-560, July.

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