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1 July 2016 Comparative Evaluation between Water Parallel Pricing System and Water Pricing System in China: A Simulation of Eliminating Irrigation Subsidy
Shen Ming, Zhong Shuai, Shen Lei, Liu Litao, Zhang Chao
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Abstract

The reform in water pricing plays a critical role in agricultural production, which is believed to have great water savings potential. We consider eliminating irrigation subsidies as a simulation and conduct a comparative evaluation between the water parallel pricing system (WPPS) and the water pricing system (WPS), which are incorporated into two computable general equilibrium (CGE) models, respectively. The results prove that, compared with WPPS, WPS would contribute higher capacities for water savings with more farming imports and less loss in farming output; households in rural and urban areas would benefit from more income and food consumption, which would be matched by increasing farming imports. A policy recommendation is that eliminating the irrigation subsidy should pay more concerns on alleviating the negative effects on farming outputs. Moreover, improvements in agricultural labor mobility and water demand elasticity are needed to enable more focus on the water conservation policy, particularly in WPS.

Shen Ming, Zhong Shuai, Shen Lei, Liu Litao, and Zhang Chao "Comparative Evaluation between Water Parallel Pricing System and Water Pricing System in China: A Simulation of Eliminating Irrigation Subsidy," Journal of Resources and Ecology 7(4), 237-245, (1 July 2016). https://doi.org/10.5814/j.issn.1674-764x.2016.04.001
Received: 5 January 2016; Accepted: 1 June 2016; Published: 1 July 2016
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KEYWORDS
computable general equilibrium model
eliminating irrigation subsidy
factor mobility
farming production sectors
water pricing reform in China
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