A Simulation of Water Conservation Policy Impacts on Long-Range Climate Change: A CGE Analysis

Abstract

Abstract The study of “water-energy-carbon” has always been an important theme in natural science. With the concern of climate change, the relationship between water and carbon has also attracted attention. China has published several policies for the water conservation, and it has begun to explore the policy transform of the water fee into water tax, which will become a key economic measure for water management. In the background of the carbon reduction, the policy may influence both the water system and the carbon system. This study mainly analyzes how future water tax affects the climate change in China by using the macroeconomic model named the computable general equilibrium model (CGE model). Two scenarios with different tax ratios have been set, and policies are implemented among different sectors. The policy will not only directly impact these industrial sectors but also indirectly impact other sectors through the economic system, which will finally do tiny contribution to the long-term climate change. The working mechanism was discussed, and policy implications were proposed at last. Firstly, China should pay attention to the impacts of macropolicies on CO2 reduction as it has set the goal of peaking carbon emissions and achieving carbon neutrality. Secondly, more study needs be carried out for the mechanisms of the “water-energy-carbon” process from the macroeconomic perspective for combing the climate change.