Managing Water on China's Farms

Institutions, Policies and the Transformation of Irrigation under Scarcity

Jinxia Wang, Qiuqiong Huang, Jikun Huang, Scott Rozelle

• Publisher: Academic Press
• Year: 2016
• Print ISBN: 9780128051641
• eBook ISBN: 9780128052945
• Topic: Technology & Engineering
• Subtopic: Environmental Management
• Index: Technology & Engineering

Managing Water on China's Farms: Institutions, Policies and the Transformation of Irrigation under Scarcity is a comprehensive and current look at the water shortage problems in China. While China has emerged as a major player in the world economy, water is the most critical factor that limits the country's further growth. China's growing water problems also have a large impact worldwide, with public health as well as economic impacts. If China were to rely heavily on food produced outside of China, the massive volume of food imports would raise food prices internationally. This book examines a series of water issues, beginning with a description of the water shortage problems in China, particularly in the northern part of the country. It then looks at the government and farmers' responses and whether past policies have been effective in resolving the water problems.Managing Water on China's Farms documents the change of existing and new water management institutional forms over time and across provinces throughout northern China, and then assesses the impacts of these changes in the rural sector. Finally, it examines potential solutions that the research has uncovered, answering the question: Who can build the bridge over China's troubled waters? Using analyses from information collected firsthand in China's rural villages, the series of surveys covers diverse geographic regions that are representative of north China and includes perspectives from multiple stakeholders such as village leaders, water managers, and farmers. The policy-oriented research and rich analysis in this book make it of interest to both policy makers and researchers with a focus on China water problems. This book can also be used in a Master or Ph.D. level resource economics course.- Uses case studies including problem, factors, proposed solutions, and pros and cons of each to facilitate translational learning and application- Uses analyses of firsthand data collected from sources of irrigation water, irrigation systems, and water users- Covers governance and operation and maintenance (O and M) practices- Provides an informative, quantitative, and rigorous analysis of survey results- Provides practical and valuable data, including the detailed micro-level data that enables estimating strategies

Section IV

Future Options

Outline

Chapter 12. Irrigation Water-Pricing Policy

Chapter 13. Water Allocation Through Water Rights Institution

Chapter 14. Adoption of Water-Saving Technology

Methodological Appendices

Chapter 12

Irrigation Water-Pricing Policy

Abstract

This chapter analyzes the potential of reforming groundwater pricing as a way to encourage water conservation and to assess its impacts on crop production and producer welfare in rural China. The chapter develops an approach that can inform policy makers about the effectiveness of water-pricing policy as well as how water-pricing policy should be implemented. The first step in the approach involves estimating a set of crop-specific production frontiers as well as household-level technical inefficiency parameters. The estimation results aid us in measuring the relationship between water and crop output as well as the value of water to households. Empirical results show that in general, there is a large gap between the cost of water and the value of water to producers. Simulation analyses are used to examine the impact of two different water-pricing policies on water savings, one that takes into account the gap between the cost of water and water value (henceforth, the informed policy); the other ignores this gap (henceforth, the uninformed policy).

Keywords

China; Data envelopment analysis; Generalized maximum entropy; Household water demand; Irrigation; Value of water; Water pricing

We have shown in previous chapters that government efforts to encourage households to conserve water have achieved only mixed results. Adoption rates of water saving technologies are startlingly low. Restrictions on groundwater drilling go unheeded. Many surface water management reforms have not been effective so far.

Under these circumstances, China's water officials and scholars have begun to consider reforming the pricing of irrigation water as an important policy instrument for dealing with the water scarcity problem (eg, Wang, 1997; Wei, 2001). Throughout this book, when trying to identify why past policy efforts have not been effective, one theme has continuously come up: the absence of economic incentives facing water users. Other researchers have reached similar conclusions (Lohmar et al., 2003; Yang et al., 2003). Similar to many places around the world, the cost of water is low in China. Groundwater users only need to pay for the cost of energy to pump water out. No extraction fees are charged. Surface water is also priced much lower than its engineering cost (Zheng, 2002). Despite the fact that the agriculture is the main water-using sector in China (68% in 2001, Ministry of Water Resources, 2002), charges for irrigation water have not been raised much. Furthermore, inside most irrigation districts, water fees are assessed based on the size of irrigated area. When the cost of water is low, or not related to the quantities demanded, the benefit from saving water is also low. As a result, the current water-pricing policy in the agricultural sector (as oppose to the industrial and residential sectors) has not been effective in providing water users with incentives to save water. China's government has raised the price of water that is charged for residential use and industrial use. For example, the price of tap water in Beijing has increased nine times since 1991, from a level of 0.014/m³ to 0.44/m³ (Chen et al., 2005). Reform to make the price of water reflect its true value is critical to providing agricultural users an incentive to save water.

While there is increasing consensus that reforming water pricing is necessary, two basic issues need to be addressed before any new policies can be made. The first issue is the effectiveness of increasing the cost of irrigation. Previous economic studies in a number of developed countries have shown that demand for irrigation water is inelastic (eg, Moore et al., 1994; Ogg and Gollehon, 1989). If water users in China are not responsive either, raising the price of water will not be an effective mechanism to reduce demand. If water users do respond to price changes, it is importa...

Table of contents

• Cover image
• Title page
• Table of Contents
• Copyright
• About the Authors
• Preface
• Acknowledgments
• Introduction and Conclusions
• Section I. Setting the Stage
• Section II. Groundwater Management
• Section III. Surface Water Management
• Section IV. Future Options
• Index