A Comprehensive Analysis of China’s Water Resources Tax Reform

Abstract

In response to the growing disparity between the supply and demand of water resources, the Chinese government has piloted a more binding and reformed water resources tax to realize the sustainable utilization of water resources. However, reasonable tax standards and their water-saving effects and economic benefits are important and worthy of attention. Therefore, in this study, we combine the virtual water theory with the price input–output model to discuss the impact of water resources taxation on the economy and its water-saving effects. The results show the following: (1) A water resources tax has a significant water-saving effect, and is predicted to save 33.12 billion cubic meters of virtual water. (2) Consumers’ expected reductions in spending on food and tobacco manufacturing and agriculture are predicted to save more virtual water at a lower economic cost. (3) The collection of water resources taxes can actively and simultaneously guide water savings in terms of consumption and production. The water consumption of the construction industry is worthy of attention. The expected output value reduction accounts for 67.2% of the total output value reduction, and its water savings account for 96% of the total water savings. Other service sectors also have ample room to optimize the utilization of their water resources.