Simulation and Analysis on the Optimal Tax Rate of Water Resources in Yunnan Province

Abstract

The shortage of water resources has become an increasingly common problem. One of the biggest challenges in China’s current economic development is the prominent contradiction between water supply and demand in some densely populated areas. Although Yunnan Province has abundant water resources, due to factors such as precipitation timing, uneven distribution, regional geological conditions and low water-use efficiency, there are also contradictions in water supply and demand. In order to accelerate the transformation of extensive regional water resources utilization and achieve sustainable regional economy development, this paper establishes a Computable General Equilibrium Model (CGE) incorporating water resources elements of Yunnan Province, and simulates the water price changes. The conclusion is that the reasonable tax rate of water resources in Yunnan Province should be about 13%. Considering the corresponding average water price, the average specific tax rate of water resources should be 0.21 yuan/m3.