The effect of sectoral differentiated water tariff adjustment on the water saving from water footprint perspective: A case study of Henan Province in China

Abstract

Water price reform is an effective way of rationalizing and protecting water resources in areas where water is scarce. This paper first presents a method for measuring water footprint by sector based on the non-competitive input-output technique. Second, this research explores the relationship between water price adjustment and labor compensation, as well as regional water export. Accordingly, this paper constructs a mathematical planning model for differentiated water price adjustment by sector with the objectives of minimum water exports and maximum labor rewards, and conducts a simulation study in the water-scarce Henan Province. The study's findings suggest that: (1) In contrast to direct water use, water consumption in Henan Province is more balanced in terms of water footprint, with the food and tobacco processing industry replacing agriculture as the leading water consumption sector. (2) Sectoral differentiated pricing saves 6.9% more export water resources in Henan Province than uniform sector-wide pricing with the same export GDP loss. (3) At present, the industries in Henan Province that are in urgent need of increased water charges are agriculture, textile industry, Manufacture of leather, Processing of timber and furniture, Manufacture of paper and printing, and Manufacture of chemical products these totals 6 industries. An increase of $1.73, $4.87, $38.55, $51.20, $5.83 and $6.55 per cubic meter in the water price of these six industries can reduce the export water resources of Henan Province by 10.72%. As a result, our findings can be used to optimize water allocation and improve sustainable water use in water-scarce regions.