Abstract
Abstract A dynamic multi-region computable general equilibrium (CGE) model is used to analyze virtual water and its effect in the Huaihe River basin, which includes Jiangsu, Anhui, Shandong and Henan provinces. The baseline scenario was first constructed to describe the trade situation and virtual water among different regions and sectors from 2009–2020. Then two hypothetical policy scenarios were set to analyze the economic, water consumption and virtual water trade impacts under different policy shocks. The results show that (1) the Huaihe River basin was a net virtual water outflow region, with 13.977 × 109 m3 virtual water transferred outside the river basin in 2009, and 26.653 × 109 m3 VW transferred to outside in 2020. Jiangsu is the largest virtual water outflow province (mainly flows to outside), followed by Anhui. Anhui suffers from severe water shortage, but provides a net virtual water outflow to Henan, Jiangsu and Shandong and outside; (2) reducing Anhui's agricultural output (S1 scenario) and Anhui's agricultural virtual water outflow (S2 scenario) can not only reduce virtual water trade but also save water, but S1 scenario reduced net virtual water outflow by more, and saved more water. S1 had a positive effect on gross domestic product (GDP), but reduced the employment rate.
Highlights
Many countries are suffering from water scarcity and it affects a third of the people in the world
In scenario S1, Anhui’s agricultural output is reduced by 5%, so its gross domestic product (GDP) will decrease by 0.218%
This study uses a dynamic multiregion computable general equilibrium (CGE) model to provide an explanation of the macroeconomic, water consumption and virtual water trade (VWT) impacts on different regions and sectors
Summary
Many countries are suffering from water scarcity and it affects a third of the people in the world. This study endeavors to bridge these gaps by using a dynamic CGE model, the SinoTERM model (the enormous regional model), which includes 137 sectors in 31 regions on the Chinese mainland, to analyze VWT and its effect on the Huaihe River basin. This paper discusses the trade situation and VW features of the Huaihe River basin from 2009–2020 It sets two policy scenarios (the policy simulation result analysis is from 2019 to 2020), to analyze the economic, water consumption and VWT impact under different policies. The equations in the model are linearized for simplicity, which, combined with accuracy via multi-step solution methods, ensures model efficiency through the use of GEMPACK software This model provides a disaggregated representation of national, regional and multiregional economies, which fully accounts for circular income flows, inter-sectoral and market linkages. Two policy scenarios were set: in S1 Anhui’s agricultural output is reduced by 5%; in S2 Anhui’s agricultural outflow demand is reduced by 5%
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