Impacts of water scarcity on socio-economic development: A case study of Gaotai County, China

Abstract

Provisioning services for socio-economic development are important hydrological ecosystem services that humans obtain from freshwater. The conflict between water scarcity and economic development in arid regions affects water utilization among different sectors. A water resource embedded social accounting matrix (SAM) can help to analyze the relationship between water resource utilization and socio-economic development. In this paper, a water resource embedded SAM was constructed in Gaotai County, northwestern China and the SAM multiplier model was applied to explore the economic structure, feedback mechanisms, and water flows among different sectors. Furthermore, scenario analyses were conducted to simulate the impacts of different policies on regional economic development and water resource utilization patterns. Through the multiplier analysis, we found that agriculture is less productive than the secondary industries because of its low development stage and lack of deep processing chains. However, the influence of agricultural sectors on the whole economic system outweighs the influence of the secondary and tertiary industries. Results also indicated that expanding agricultural exports can promote rural employment and improve rural household welfare, but will also lead to water resources outflow and aggravate water conflicts among different water users. At last, the simulation results of price reform showed that agriculture water price increase will cause a chain effects among different sectors. Water price increases by one unit will lead to the price of agricultural products, industrial products, and labor increase by 0.03, 0.018, and 0.005 units, respectively and the Consumer Price Index increases by 0.005 units.