IDEAS home Printed from https://ideas.repec.org/a/eee/soceps/v94y2024ics0038012124001289.html
   My bibliography  Save this article

Water markets and water inequality: China's water rights trading pilot

Author

Listed:
  • Sheng, Jichuan
  • Cheng, Qian
  • Yang, Hongqiang

Abstract

Water inequality could exacerbate global water scarcity due to the finite nature of water resources. Water markets aimed at overcoming failures in public water distribution systems may offer potential solutions to water inequality. However, existing studies failed to explain how water markets and water inequality are related. This study constructs a water inequality-water market conceptual framework to fill this gap. It examines the influence of water markets on water inequality in the context of China's Water Rights Trading Pilot. This study argues that water markets based on economic rationality can mitigate water inequality compared to command-and-control water policies. In addition, the mitigating effect of water markets on water inequality relies on changing the industrial structure, promoting technological innovation in irrigation, and improving recycled water use. Finally, the influence of water markets on water inequality tends to be heterogeneous depending on differences in economic development, precipitation, and water demand.

Suggested Citation

  • Sheng, Jichuan & Cheng, Qian & Yang, Hongqiang, 2024. "Water markets and water inequality: China's water rights trading pilot," Socio-Economic Planning Sciences, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:soceps:v:94:y:2024:i:c:s0038012124001289
    DOI: 10.1016/j.seps.2024.101929
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0038012124001289
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.seps.2024.101929?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. G. J. Pronk & S. F. Stofberg & T. C. G. W. Dooren & M. M. L. Dingemans & J. Frijns & N. E. Koeman-Stein & P. W. M. H. Smeets & R. P. Bartholomeus, 2021. "Increasing Water System Robustness in the Netherlands: Potential of Cross-Sectoral Water Reuse," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 35(11), pages 3721-3735, September.
    2. Elisa Savelli & Maurizio Mazzoleni & Giuliano Baldassarre & Hannah Cloke & Maria Rusca, 2023. "Urban water crises driven by elites’ unsustainable consumption," Nature Sustainability, Nature, vol. 6(8), pages 929-940, August.
    3. Grafton, R. Quentin & Horne, James, 2014. "Water markets in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 145(C), pages 61-71.
    4. M. Dinesh Kumar & R. Maria Saleth, 2018. "Inequality in the Indian Water Sector: Challenges and Policy Options," Indian Journal of Human Development, , vol. 12(2), pages 265-281, August.
    5. Ashesh Rambachan & Jonathan Roth, 2023. "A More Credible Approach to Parallel Trends," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(5), pages 2555-2591.
    6. Simon de Bonviller & Alec Zuo & Sarah Ann Wheeler, 2019. "Is there evidence of insider trading in Australian water markets?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(2), pages 307-327, April.
    7. Leeann De Mouche & Shawn Landfair & Frank A. Ward, 2011. "Water Right Prices in the Rio Grande: Analysis and Policy Implications," International Journal of Water Resources Development, Taylor & Francis Journals, vol. 27(02), pages 291-314.
    8. Bhandari, Humnath & Pandey, Sushil, 2006. "Economics of Groundwater Irrigation in Nepal: Some Farm-Level Evidences," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 38(1), pages 185-199, April.
    9. Yi Chen & Ziying Fan & Xiaomin Gu & Li-An Zhou, 2020. "Arrival of Young Talent: The Send-Down Movement and Rural Education in China," American Economic Review, American Economic Association, vol. 110(11), pages 3393-3430, November.
    10. Krishna Malakar & Trupti Mishra & Anand Patwardhan, 2018. "Inequality in water supply in India: an assessment using the Gini and Theil indices," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(2), pages 841-864, April.
    11. Pullen, Jennifer L. & Colby, Bonnie G., 2008. "Influence of Climate Variability on the Market Price of Water in the Gila-San Francisco Basin," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(3), pages 1-15.
    12. Bhandari, Humnath & Pandey, Sushil, 2006. "Economics of Groundwater Irrigation in Nepal: Some Farm-Level Evidences," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(1), pages 1-15, April.
    13. Ellen M. Bruno & Katrina Jessoe, 2021. "Using Price Elasticities of Water Demand to Inform Policy," Annual Review of Resource Economics, Annual Reviews, vol. 13(1), pages 427-441, October.
    14. Gu, Alun & Teng, Fei & Lv, Zhiqiang, 2016. "Exploring the nexus between water saving and energy conservation: Insights from industry sector during the 12th Five-Year Plan period in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 28-38.
    15. Min Jiang & Michael Webber & Jon Barnett & Wenjing Zhang & Gang Liu, 2022. "Making a water market intermediary: the China Water Exchange," International Journal of Water Resources Development, Taylor & Francis Journals, vol. 38(4), pages 699-716, July.
    16. G. Donoso & O. Melo & C. Jordán, 2014. "Estimating Water Rights Demand and Supply: Are Non-market Factors Important?," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(12), pages 4201-4218, September.
    17. Bryan Leonard & Christopher Costello & Gary D Libecap, 2019. "Expanding Water Markets in the Western United States: Barriers and Lessons from Other Natural Resource Markets," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(1), pages 43-61.
    18. Brian Nolan & Max Roser & Stefan Thewissen, 2019. "GDP Per Capita Versus Median Household Income: What Gives Rise to the Divergence Over Time and how does this Vary Across OECD Countries?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(3), pages 465-494, September.
    19. Aghaie, Vahid & Alizadeh, Hosein & Afshar, Abbas, 2020. "Agent-Based hydro-economic modelling for analysis of groundwater-based irrigation Water Market mechanisms," Agricultural Water Management, Elsevier, vol. 234(C).
    20. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 1-19.
    21. Zhang, Qi & Yu, Zhi & Kong, Dongmin, 2019. "The real effect of legal institutions: Environmental courts and firm environmental protection expenditure," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    22. A. Manero & S. A. Wheeler, 2022. "Perceptions of Tanzanian smallholder irrigators on impact pathways between water equity and socioeconomic inequalities," International Journal of Water Resources Development, Taylor & Francis Journals, vol. 38(1), pages 80-107, January.
    23. Bajaj, Akshi & Singh, S.P. & Nayak, Diptimayee, 2022. "Impact of water markets on equity and efficiency in irrigation water use: A systematic review and meta-analysis," Agricultural Water Management, Elsevier, vol. 259(C).
    24. Khair, Syed M. & Mushtaq, Shahbaz & Culas, Richard J. & Hafeez, Mohsin, 2012. "Groundwater markets under the water scarcity and declining watertable conditions: The upland Balochistan Region of Pakistan," Agricultural Systems, Elsevier, vol. 107(C), pages 21-32.
    25. Zhang, Lijuan & Wang, Jinxia & Huang, Jikun & Rozelle, Scott, 2008. "Development of Groundwater Markets in China: A Glimpse into Progress to Date," World Development, Elsevier, vol. 36(4), pages 706-726, April.
    26. Danyang Di & Zening Wu & Huiliang Wang & Cuimei Lv, 2020. "A Double-Layer Dynamic Differential Game Model for the Optimal Trading Quantity of Water and Price Setting in Water Rights Transactions," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 34(1), pages 245-262, January.
    27. Ramón Barberán & Fernando Arbués, 2009. "Equity in Domestic Water Rates Design," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 23(10), pages 2101-2118, August.
    28. Bjornlund, Henning & McKay, Jennifer, 2002. "Aspects of water markets for developing countries: experiences from Australia, Chile, and the US," Environment and Development Economics, Cambridge University Press, vol. 7(4), pages 769-795, October.
    29. Janice A. Beecher, 2020. "Policy Note: A Universal Equity–Efficiency Model for Pricing Water," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-29, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sheng, Jichuan & Yang, Hongqiang, 2024. "Linking water markets with payments for watershed services: the eastern route of China's South-North Water Transfer Project," Agricultural Water Management, Elsevier, vol. 295(C).
    2. Bajaj, Akshi & Singh, S.P. & Nayak, Diptimayee, 2022. "Impact of water markets on equity and efficiency in irrigation water use: A systematic review and meta-analysis," Agricultural Water Management, Elsevier, vol. 259(C).
    3. Li, Daiyue & Jin, Yanhong & Cheng, Mingwang, 2024. "Unleashing the power of industrial robotics on firm productivity: Evidence from China," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 500-520.
    4. Ellen M. Bruno & Richard J. Sexton, 2020. "The Gains from Agricultural Groundwater Trade and the Potential for Market Power: Theory and Application," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(3), pages 884-910, May.
    5. Perilla, Sergio & Prem, Mounu & Purroy, Miguel E. & Vargas, Juan F., 2024. "How peace saves lives: Evidence from Colombia," World Development, Elsevier, vol. 176(C).
    6. Françeska Tomori & Erik Ansink & Harold Houba & Nick Hagerty & Charles Bos, 2024. "Market power in California's water market," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(3), pages 1274-1299, May.
    7. Feng Li & Xuewan Du & Pengchao Zhang & Huimin Li & Xiaoxia Fei, 2023. "Co-Evolutionary Mechanism of Stakeholders’ Strategies in Comprehensive Agricultural Water Price Reform: The View of Evolutionary Game Based on Prospect Theory," Sustainability, MDPI, vol. 15(15), pages 1-31, August.
    8. Seidl, Constantin & Wheeler, Sarah Ann & Zuo, Alec, 2020. "High turbidity: Water valuation and accounting in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 230(C).
    9. Foster, Timothy & Adhikari, Roshan & Adhikari, Subash & Justice, Scott & Tiwari, Baburam & Urfels, Anton & Krupnik, Timothy J., 2021. "Improving pumpset selection to support intensification of groundwater irrigation in the Eastern Indo-Gangetic Plains," Agricultural Water Management, Elsevier, vol. 256(C).
    10. Suresh Baral & Kyung Chun Kim, 2015. "Stand-Alone Solar Organic Rankine Cycle Water Pumping System and Its Economic Viability in Nepal," Sustainability, MDPI, vol. 8(1), pages 1-18, December.
    11. Ai, Jingyi & Feng, Jin & Zhang, Xiaohan, 2024. "Long-term care insurance coverage and labor force participation of older people: Evidence from China," China Economic Review, Elsevier, vol. 86(C).
    12. Arne Henningsen & Guy Low & David Wuepper & Tobias Dalhaus & Hugo Storm & Dagim Belay & Stefan Hirsch, 2024. "Estimating Causal Effects with Observational Data: Guidelines for Agricultural and Applied Economists," IFRO Working Paper 2024/03, University of Copenhagen, Department of Food and Resource Economics.
    13. Posso, Christian & Saravia, Estefanía & Uribe, Pablo, 2023. "Acing the test: Educational effects of the SaberEs test preparation program in Colombia," Economics of Education Review, Elsevier, vol. 97(C).
    14. G. Donoso & O. Melo & C. Jordán, 2014. "Estimating Water Rights Demand and Supply: Are Non-market Factors Important?," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(12), pages 4201-4218, September.
    15. Dandan Zhu & Xinping Tao & Meibo Huang, 2023. "Law Reinforcement, Production Pattern and Enterprise Environmental Performance: Evidence from Environmental Courts in China," Sustainability, MDPI, vol. 15(5), pages 1-20, March.
    16. Zeyu Wang & Juqin Shen & Fuhua Sun & Zhaofang Zhang & Dandan Zhang & Yizhen Jia & Kaize Zhang, 2019. "A Pricing Model for Groundwater Rights in Ningxia, China Based on the Fuzzy Mathematical Model," IJERPH, MDPI, vol. 16(12), pages 1-20, June.
    17. Cuimei Lv & Huiqin Li & Minhua Ling & Xi Guo & Zening Wu & Changkuan Gu & Yang Li, 2021. "An Innovative Emergy Quantification Method for Eco-economic Compensation for Agricultural Water Rights Trading," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 35(3), pages 775-792, February.
    18. Smith, Steven M., 2021. "The relative economic merits of alternative water right systems," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    19. Liu, Li & Sheng, Jichuan, 2024. "Energy quota trading and energy vulnerability: China's energy quota trading pilot," Energy Policy, Elsevier, vol. 184(C).
    20. Sheng, Jichuan & Qiu, Wenge, 2023. "Inter-basin water transfer policies and water-use technical efficiency: China's South-North Water Transfer Project," Socio-Economic Planning Sciences, Elsevier, vol. 85(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:soceps:v:94:y:2024:i:c:s0038012124001289. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/seps .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.