Impact of Water Rights Transaction in the Beijing-Tianjin-Hebei Region in China Based on an Improved Computable General Equilibrium Model

Abstract

Water shortages in the Beijing-Tianjin-Hebei (BTH) region in China have constrained the region’s coordinated development. A feasible solution is introducing water rights transactions through the middle route of the South-to-North Water Diversion Project (SNWDP). However, there are few methods available for systematically simulating and evaluating the impact of inter-regional water rights transactions. In this study, an improved computable general equilibrium (CGE) model was developed to simulate the water rights transactions. Different water resources were integrated as intermediate inputs, and the model includes a substitution mechanism between different water resources. The water stress index (WSI) was used to evaluate the impact on the economy and water resources simulated by the model. The study proposes and evaluates different scenarios with different water-saving levels and transaction volumes. Water rights transactions have a positive effect on the overall economic growth of the BTH region, reducing the local water resource stress in Beijing and Tianjin; the transactions have a limited impact on the economy and water usage of Hebei Province. Compared with the general water-saving intensity scenario without water rights transactions, the recommended scenario adopts ultra water-saving intensity, along with the transfer of 100 hm3 of water rights from Hebei to Beijing and Tianjin. This leads to an increase in the overall gross domestic product (GDP) of the BTH region by CNY 0.587 trillion (USD 99.6 billion); a decrease in local water usage in Beijing and Tianjin of 197 hm3; and a relief in the regional imbalance of water resources stress. This study provides a quantitative analysis tool for evaluating the impact of water rights transactions and optimizing water resources allocations in the BTH region, providing a reference for simulating and evaluating water rights transactions in other regions.