Dynamic Relationship between Agricultural Water Use and the Agricultural Economy in the Inner Mongolia Section of the Yellow River Basin

Abstract

Water is a crucial resource for agricultural development in the Yellow River Basin. However, the effects of water shortages on the region’s agricultural development are becoming increasingly evident, creating a need to examine the relationship between agricultural water use (AWU) and the agricultural economy. This study uses panel vector autoregression to analyze the relationship between AWU and the agricultural economy in the Inner Mongolia section of the Yellow River Basin from 1998 to 2018. The results indicate the following: (1) AWU in the Inner Mongolia section of the Yellow River Basin significantly declined during the study period, showing clear differences in the AWU’s effectiveness among regions; (2) agriculture in the region stabilized after significant growth, and the share of primary-sector industries in the national economy also stabilized after significant decline; (3) in the long run, AWU and the agricultural economy become cointegrated with the AWU Granger-causing agricultural economy. By deepening our understanding of agricultural water demand in the Yellow River Basin, these findings provide theoretical justification for establishing water-conserving irrigation systems and making sustainable use of water resources.