Market adatations to increased water prices in China: the effects on water demand and rice production
2003
Rosegrant, M.W. | Cai, X.
China faces rapidly growing scarcity in many important river basins, particularly in the north. New supplies of water for both the agricultural and nonagricultural sectors are increasingly expensive. Rapid growth in domestic and industrial demand is likely to draw water from irrigation, putting downward pressure on rice and other irrigated crops. However, despite growing scarcity, in much of China, water is not treated as a scarce resource. Irrigation water is generally provided at little or no cost and in urban areas the price of water often does not cover the cost of delivery. With little incentive for water managers, farmer-irrigators, and urban water consumers to conserve, water is overused and wasted. Water price policy reform could provide incentives to use water more efficiently. In this paper, we examine the effects of increased water prices on demand for water for irrigation and for the domestic and industrial sectors, and on the availability of water for environmental purposes. The effect of the change in rice and other cereal production because of water price changes in China on food demand and trade status for China will also be analyzed. The analysis uses the IMPACT-WATER model, a global integrated water and food supply and demand model. The model allows assessment of the effect of water prices in nine major river basins in China. The results show that significant but reasonable water price increases will lead to considerable water savings for environmental uses, especially in dry basins in North and Northwest China, while irrigated food production will not be affected much if water prices induce the improvement of irrigation water-use efficiency.
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