Impact of Water Saving Policy on Water Resource and Economy for Hebei, China Based on an Improved Computable General Equilibrium Model

Abstract

Hebei Province of China is facing a severe water resource shortage, making it urgent to formulate economical and effective water conservation policies. However, few studies have focused on analyzing the resource and economic impacts of a water policy. This study developed an improved computable general equilibrium (CGE) model with an extended water resources module as a policy analysis tool. The extended water resources module includes different water resources as commodities and water sectors, and introduces a substitution mechanism among the water resources. Policy scenarios containing different policy types and policy objects were established, including water price, technology (tech) improvement, structure adjustment, and water reuse policies in primary, secondary, and tertiary sectors. The impact on the water resource and economy of the scenarios was analyzed using the CGE model. The recommended policies include: an agricultural technology improvement policy that decreases groundwater usage by 240 hm3; an industrial technology improvement policy under which water usage per 10,000 CNY of industrial added value decreases by 13%; an industrial water reuse policy that increases unconventional water usage by 20%; and a structure adjustment policy to increase the proportion of the tertiary sector. The study provides an analysis tool for simulating and evaluating a water resource policy.

Modeling Hydrologic–Economic Interactions for Sustainable Development: A Case Study in Inner Mongolia, China

“…The economic profit from improved water has been proven to be greater than the cost of water saving. Previous studies have discovered that reductions in water usage in the primary, secondary, and tertiary sectors may lead to increased sector output if water-use efficiency is improved [29,30]. This finding is similar to our result at the macroeconomic scale.…”

“…Stakeholders must adjust water-saving rates accordingly with different climate settings. Possible measures proven to be beneficial to economic growth include agricultural and industrial technology improvement, industrial water reuse, and structural adjustment towards the tertiary sector [30]. However, the realistic adoption of specific policies hinges on critical factors, such as cost-effectiveness and associated transaction costs.…”

“…Institutional reforms (e.g., water saving, water pricing, and pollution abatement) have been used to observe interactions of the economy with water resource changes. Previous studies discussed the effects of various water-saving policies in detail, including technological improvements, structural adjustments, and water reuse [30]. Water-pricing reform policies can enhance economic performance, and the impact varies across different water users and sources [31].…”

Dynamic Scenario Predictions of Peak Carbon Emissions in China’s Construction Industry

“…Changes in key performance indicators, such as energy consumption and carbon emissions, have been analyzed in the literature using the SDA [12]. The generalized divisor index method (GDIM) and the computable general equilibrium (CGE) model are two additional models that are used in the process of determining the impact variables that have an effect on carbon emissions [13,14].…”

Can Property Rights Reform of China’s Agricultural Water Facilities Improve the Quality of Facility Maintenance and Enhance Farmers’ Water Conservation Behavior?—A Typical Case from Yunnan Province, China

“…China is one of the 13 countries with the most severe water shortages in the world [12]. Water scarcity has become a bottleneck limiting China's development [13][14][15]. Agricultural irrigation water is the largest water-consuming sector in China, accounting for more than 60% of China's water use.…”