Analysis of the Economy-Wide Rebound Effect of Water Efficiency Improvement in China Based on a Multi-Sectoral Computable General Equilibrium Analysis

Yexin Zhou,Qi Cui,Wei Wei,Ling He,Jinghan Li

doi:10.3390/w13212963

Abstract

The effectiveness of water efficiency improvement is restricted by the water rebound effect by which anticipated water resource saving from improved water efficiency may be partly or wholly offset or even surpassed by an increase in water demand. The economy-wide rebound effect of water efficiency improvement in China is poorly understood. This study explored the economy-wide rebound effect of water efficiency improvement in China based on a multi-sectoral computable general equilibrium model. The results suggested that water efficiency improvement could effectively reduce water consumption in producing sectors and benefit economic growth and employment. However, the decrease in water consumption was much lower than the volume of water efficiency improvement, which indicated that the rebound effect partly offset water savings caused by water efficiency improvement. We observed a larger reduction in water consumption in the long run, which indicated a smaller rebound effect and a more significant effect in saving water resources in the long term. Notably, the total rebound effect in the short-run closure was much larger than that in the long-run closure, and the effect from the production side was much smaller. Hence, the economic-wide rebound effect is primarily derived from the incremental water consumption by households, investors, and governments.

Highlights

Owing to the limited water supply and increase in water consumption due to the growing population and rapid economic growth, China is facing severe water shortages.In 2019, China’s total water utilization reached 602.12 billion m3, accounting for 74% of its exploitable water resources [1]
This study contributes to the literature in two ways: First, to the best of our knowledge, this is the first study to measure the economy-wide rebound effect of water efficiency for China in a comprehensive Computable General Equilibrium (CGE) model
In the short-run closure, the gross domestic product (GDP) would grow by 0.0052%, 0.0258%, and 0.0293% if the water efficiency increases by 1%, 5%, and 10%, respectively (Row 1, Table 1)

Summary

Introduction

Owing to the limited water supply and increase in water consumption due to the growing population and rapid economic growth, China is facing severe water shortages. In 2019, China’s total water utilization reached 602.12 billion m3 , accounting for 74% of its exploitable water resources [1]. The northern part of the country experiences the most severe water shortages with an average freshwater availability of 760 m3 per capita per year, which is 25% less than the internationally accepted water scarcity level [2]. To address severe water shortages, China’s government has adopted a series of policies that include improving water resource efficiency [3]. The policy clarified that China’s water efficiency must reach or approach global advanced levels by 2030. The water volume of CNY 10,000 of industrial added value will be reduced to below 40 m3 , and the effective utilization coefficient of farmland irrigation water will increase to above 0.6

Methods

Results

Discussion

Conclusion