The Impact of Water Resources Tax Policy on Water Saving Behavior

Abstract

The Chinese water administration department has continuously explored and formulated regulatory and market-oriented water control policies to alleviate the contradiction between water shortage and economic and social development and promote the new idea of ‘water-saving first’ water control. Among them, implementing a water resources tax policy as a price means has achieved initial success. The water-saving effect of water resources tax collection is one of the important bases for determining whether the tax reform will be promoted nationwide in the next stage. Based on this, taking Hubei Province, the first tax reform pilot in China, as an example, water resource elements are integrated into the economic system and a dynamic stochastic general equilibrium model (DSGE) is constructed, embedded in water resources tax to simulate the persistent impact of such a tax on water saving objectives. The research shows that: (1) A water resources tax can effectively achieve the goal of water-saving and improve the utilization efficiency of water resources. (2) Levying a water resources tax helps to improve the water-saving awareness of enterprises and residents and promotes enterprises to optimize their production structure. (3) Rational and efficient use of special water resources protection funds is the basis for ensuring the effective implementation of a water resources tax. It can also improve the recycling capacity of water resources. This means that the government should speed up the exploration of the relationship between supply and demand for comprehensive water resources, to establish a reasonable range of water resources tax rates to guarantee people’s livelihoods, and to accelerate the construction of water resources tax guarantee measures, in order to achieve a relatively steady-state of water resources utilization and protection, realizing the dual goal of sustainable economic development and sustainable use of water resources.