Prediction and analysis of water rights trading volume: Based on the water rights trading in Inner Mongolia, China

Abstract

Water rights trading volume (WRTV) is an integral part of an effective transaction. At present, in China, WRTV is mostly based on the water demand of the transferee, not the transferor. Some transactions last for a long time, yet lack proper measures to adjust trading volume, making theoretical and quantitative studies on WRTV necessary and essential. Therefore, based on the theory of property rights, this study first analyzed the concept of WRTV, and proposed that WRTV must consider the tradable water volume (TWV) of the transaction parties. For that, this paper divided water rights trading into two stages: initial stage and operation stage, to analyze how to measure WRTV in different stages. Second, currently, industry or sector is a major player of water rights trading. TWV of industry is, hence, the difference between the initial water rights volume (IWRV) and water demand of industry, significant for calculating WRTV in different stages. For that, this study employed the ratio method to calculate the IWRV of industry, and the Grey Model—GM (1,1) to predict the water demand of industry. Last, this paper carried out a case study on the inter-league and inter-city water rights trading between Bayannur city and Ordos city in Inner Mongolia, China. Results show that the TWV of industry of Bayannur and Ordos in 2030 are – 904.966 million m3 and − 87.135 million m3 respectively, implying insufficient TWV for the transferee, which may lead to transaction breakdown. The theory and calculation method of WRTV proposed in this study lay a theoretical foundation for WRTV measurement, and can help facilitate the orderly development of water rights trading in China.