Resilient or Not: A Comparative Case Study of Ten Local Water Markets in China

Abstract

Despite the global expansion of water markets, their resilience has received little scholarly attention, even though they are vulnerable to external and internal disturbances. Since the 1990s, the water market has been actively promoted by China as an important institutional coordination mechanism for efficient water use. This article examines what contextual factors, in configurations, contribute to the resilience of water markets in China. We distinguish between resilient and factitious water markets as two outcome variables and distil four conditions from market environmentalism to explain the variance in their outcomes: ownership of water entitlements, market intermediaries, water pricing, and spot/forward trade categories. Using crisp-set qualitative comparative analysis (csQCA), we analyzed seven resilient and three factitious water markets in China. Our findings show that a water market’s framework is multidimensional and complex and that no necessary conditions contribute to resilience. Two sufficient solutions display the configurational complexity of water markets’ resilience. Path 1 includes strong intermediary, uncompetitive price, and forward water trade. Path 2 includes privatization of water entitlements, spot contracts, and competitive pricing. Weak intermediary together with forward water trade determines factitious water markets. The QCA results reveal that there exist multiple paths that a resilient water market can follow and develop. Therefore, policymakers must be cautious about pushing for water market indiscriminately, especially by over-privatization and unlimited investment in water banks.