IDEAS home Printed from https://ideas.repec.org/a/spr/waterr/v21y2007i9p1517-1533.html
   My bibliography  Save this article

Dynamic Computable General Equilibrium Model and Sensitivity Analysis for Shadow Price of Water Resource in China

Author

Listed:
  • Jing He
  • Xikang Chen
  • Yong Shi
  • Aihua Li

Abstract

A novel dynamic computable general equilibrium model based on National Water Resource Input Holding Output Table is proposed to calculate the Shadow Price of water resource in China. Unlike previous approaches, the dynamic Shadow Price of water resource is largely based on the scarcity extent and can reflect the marginal long-term value in the balanced growth path of China. Firstly, the basic concepts of dynamic Input Output analysis and Turnpike Theory are reviewed. Then, Dynamic Computable General Equilibrium (DCGE) is elaborated to calculate the Shadow Price, including the definition and computer-based algorithm. Furthermore, Shadow Price of water resource in China from 1949 to 2050 is calculated based on the DCGE. Also the sensitivity analysis of the DCGE for Shadow Price of water resource in China is presented. Dynamic Shadow Price of water resource has two meanings for China government: (1) Project evaluation. Every large-scale project in China must have national economic evaluation and the dynamic Shadow Price is prerequisite for national economic evaluation. (2) Market price of water resource. A lesson from this paper is that Shadow Price of water resource in domestic market of China should be rewritten according to the dynamic Shadow Price. In addition, the parallel computations approach could also be used to solve these problems in different countries or for different natural resources. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Jing He & Xikang Chen & Yong Shi & Aihua Li, 2007. "Dynamic Computable General Equilibrium Model and Sensitivity Analysis for Shadow Price of Water Resource in China," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 21(9), pages 1517-1533, September.
    • Handle: RePEc:spr:waterr:v:21:y:2007:i:9:p:1517-1533
    DOI: 10.1007/s11269-006-9102-7
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11269-006-9102-7
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11269-006-9102-7?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. Aiken, Deborah Vaughn, 2006. "Application of the distance function to nonmarket valuation of environmental goods and services: An illustrative example," Ecological Economics, Elsevier, vol. 60(1), pages 168-175, November.
    2. Dreze, Jean & Stern, Nicholas, 1990. "Policy reform, shadow prices, and market prices," Journal of Public Economics, Elsevier, vol. 42(1), pages 1-45, June.
    3. Horsley, Anthony & Wrobel, Andrew J., 2007. "Profit-maximizing operation and valuation of hydroelectric plant: A new solution to the Koopmans problem," Journal of Economic Dynamics and Control, Elsevier, vol. 31(3), pages 938-970, March.
    4. Farhed A. Shah & David Zilberman & Ujjayant Chakravorty, 1995. "Technology Adoption in the Presence of an Exhaustible Resource: The Case of Groundwater Extraction," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 291-299.
    5. J. v. Neumann, 1945. "A Model of General Economic Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 13(1), pages 1-9.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dinar, Ariel, 2012. "Economy-wide implications of direct and indirect policy interventions in the water sector: lessons from recent work and future research needs," Policy Research Working Paper Series 6068, The World Bank.
    2. 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.
    3. Buttinelli, Rebecca & Cortignani, Raffaele & Caracciolo, Francesco, 2024. "Irrigation water economic value and productivity: An econometric estimation for maize grain production in Italy," Agricultural Water Management, Elsevier, vol. 295(C).
    4. 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).
    5. Lijin Zhong & Arthur Mol, 2010. "Water Price Reforms in China: Policy-Making and Implementation," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 24(2), pages 377-396, January.
    6. Fu, Xue & Lahr, Michael & Yaxiong, Zhang & Meng, Bo, 2017. "Actions on climate change, Intended Reducing carbon emissions in China via optimal industry shifts: Toward hi-tech industries, cleaner resources and higher carbon shares in less-develop regions," Energy Policy, Elsevier, vol. 102(C), pages 616-638.
    7. Tamaki, Tetsuya & Shin, Kong Joo & Nakamura, Hiroki & Fujii, Hidemichi & Managi, Shunsuke, 2018. "Shadow prices and production inefficiency of mineral resources," Economic Analysis and Policy, Elsevier, vol. 57(C), pages 111-121.

    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. Bhattacharyya, Aditi & Kutlu, Levent & Sickles, Robin C., 2018. "Pricing Inputs and Outputs: Market prices versus shadow prices, market power, and welfare analysis," Working Papers 18-009, Rice University, Department of Economics.
    2. Mackinnon, John & Reinikka, Ritva, 2000. "Lessons from Uganda on strategies to fight poverty," Policy Research Working Paper Series 2440, The World Bank.
    3. Zacharias Bragoudakis & Evangelia Kasimati & Christos Pierros & Nikolaos Rodousakis & George Soklis, 2022. "Measuring Productivities for the 38 OECD Member Countries: An Input-Output Modelling Approach," Mathematics, MDPI, vol. 10(13), pages 1-21, July.
    4. Arthur Brackmann Netto, 2017. "The Double Edge of Case-Studies: A Frame-Based Definition of Economic Models," Working Papers, Department of Economics 2017_21, University of São Paulo (FEA-USP).
    5. Pham, Manh D. & Zelenyuk, Valentin, 2019. "Weak disposability in nonparametric production analysis: A new taxonomy of reference technology sets," European Journal of Operational Research, Elsevier, vol. 274(1), pages 186-198.
    6. Elisa BORGHI & Chiara DEL BO & Massimo FLORIO, 2010. "The theory of public enterprise, social welfare and planning: a note," Departmental Working Papers 2010-20, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    7. Amir, Shmuel, 1995. "Welfare maximization in economic theory: Another viewpoint," Structural Change and Economic Dynamics, Elsevier, vol. 6(3), pages 359-376, August.
    8. Bogliacino, Francesco & Rampa, Giorgio, 2014. "Expectational bottlenecks and the emerging of new organizational forms," Structural Change and Economic Dynamics, Elsevier, vol. 29(C), pages 28-39.
    9. van Ackere, Ann & Ochoa, Patricia, 2010. "Managing a hydro-energy reservoir: A policy approach," Energy Policy, Elsevier, vol. 38(11), pages 7299-7311, November.
    10. Caspar Sauter, 2014. "How should we measure environmental policy stringency? A new approach," IRENE Working Papers 14-01, IRENE Institute of Economic Research.
    11. Matheus Assaf, 2017. "Coast to Coast: How MIT's students linked the Solow model and optimal growth theory," Working Papers, Department of Economics 2017_20, University of São Paulo (FEA-USP).
    12. Bastianin, Andrea & Castelnovo, Paolo & Florio, Massimo, 2018. "Evaluating regulatory reform of network industries: a survey of empirical models based on categorical proxies," Utilities Policy, Elsevier, vol. 55(C), pages 115-128.
    13. Heinz D. Kurz, 2011. "The Contributions of Two Eminent Japanese Scholars to the Development of Economic Theory: Michio Morishima and Takashi Negishi," Chapters, in: Heinz D. Kurz & Tamotsu Nishizawa & Keith Tribe (ed.), The Dissemination of Economic Ideas, chapter 13, Edward Elgar Publishing.
    14. Stern, Nicholas, 2014. "Ethics, equity and the economics of climate change paper 2: economics and politics," LSE Research Online Documents on Economics 62704, London School of Economics and Political Science, LSE Library.
    15. Dasgupta, Partha, 2000. "Valuation and evaluation: measuring the quality of life and evaluating policy," LSE Research Online Documents on Economics 6657, London School of Economics and Political Science, LSE Library.
    16. Sickles, Robin C. & Song, Wonho & Zelenyuk, Valentin, 2018. "Econometric Analysis of Productivity: Theory and Implementation in R," Working Papers 18-008, Rice University, Department of Economics.
    17. Abuelhaj, Tareq & Gassmann, Franziska & O'Donoghue, Cathal, 2018. "Price opinion data in subsidized economies: Empirical evidence from Iraq," MERIT Working Papers 2018-033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    18. Christoph Heinzel & Ralph Winkler, 2011. "Distorted Time Preferences and Time-to-Build in the Transition to a Low-Carbon Energy Industry," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 49(2), pages 217-241, June.
    19. Schopper, Herwig, 2016. "Some remarks concerning the cost/benefit analysis applied to LHC at CERN," Technological Forecasting and Social Change, Elsevier, vol. 112(C), pages 54-64.
    20. Grüne, Lars & Semmler, Willi & Stieler, Marleen, 2015. "Using nonlinear model predictive control for dynamic decision problems in economics," Journal of Economic Dynamics and Control, Elsevier, vol. 60(C), pages 112-133.

    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:spr:waterr:v:21:y:2007:i:9:p:1517-1533. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.