Abstract
Pressure on existing water resources in China is expected to increase with undergoing rapid demographic transformation, economic development, and global climate changes. We investigate the economy-wide impacts of projected urban population growth and economic structural change on water use and allocation in China. Using a multi-regional CGE (Computable General Equilibrium) model, TERM (The Enormous Regional Model), we explore the implications of selected future water scenarios for China’s nine watershed regions. Our results indicate that urbanization and industrial transformation in China will raise the opportunity cost of water use and increase the competition for water between non-agricultural users and irrigation water users. The growth in water demand for domestic and industrial uses reduces the amount of water allocated to agriculture, particularly lower-value and water-intensive field crops. As a response, farmers have the incentive to shift their agricultural operations from traditional field crop production to higher-value livestock or intensive crop production. In addition, our results suggest that growing water demand due to urbanization and industrial transformation will raise the shadow price of water in all nine river basins. Finally, we find that national economic growth is largely attributable to urbanization and non-agricultural productivity growth.
Highlights
Water is an essential natural endowment available to mankind and is of high relevance to food production, human livelihoods, and the preservation of life and natural environment on earth
In Scenario 2, we investigate the impacts of economic structural change
Given the two reasons described above, in the long run, farmers have the incentive to shift their agricultural operations from traditional field crop production to higher-value livestock or intensive crop production
Summary
Water is an essential natural endowment available to mankind and is of high relevance to food production, human livelihoods, and the preservation of life and natural environment on earth. Partly due to climate change and other anthropogenic factors, water resources are becoming increasingly scarce in many arid and semi-arid regions of the world [1,2]. Urbanization, accelerated industrialization, and increased domestic water use have aggravated the problem. World projection has shown that water consumption for most uses will increase by at least 50% by 2025 compared to the 1995 level [3]. Water resource constraint is a critical issue facing many countries, especially those in the developing world, where rapid demographic transformation and economic development continue to cause growing water demand.
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