Assessment of the economic impact of South-to-North Water Diversion Project on industrial sectors in Beijing

Abstract

Beijing is a city with a shortage of water resources, and the water resource per capita is far below that of the lower limit of international water shortage. With rapid economic development and the improvement in living standards, the contradiction between the increasing demand for water and the shortage of water resources becomes increasingly pointed. It also becomes the main factor restricting the socioeconomic development of Beijing. Figure 1 shows the total water supply and structure of Beijing in 2008-2013. Since the beginning of South-to-North Water Diversion in 2008, the total volume of the South-to-North Water has grown to 0.32 billion cubic meters in 2013. Water diverted from the south to Beijing is mainly used for industrial and domestic purposes and to substitute the previously overexploited underground water. 0.3 billion cubic meters per year is being used as domestic water in the city center, substituting 0.2 billion cubic meters of water supplied by the Miyun reservoir and reducing the exploitation of underground water by 0.1 billion cubic meters. According to the General Plan for Beijing AbstractIn order to address the serious water shortage problem in northern China, China has launched the South-to-North Water Diversion Scheme, which is a large-scale inter-basin water diversion project. With Beijing as an example and using input-output analysis, this paper analyzes the macroeconomic impact of the increased water supply on the affected areas in the industrial sector. Our empirical results show that the increased water supply has brought about direct economic benefits to Beijing, which had increased from RMB 4.39 billion in 2008 to RMB 55.99 billion in 2013. The estimated full value of economic benefits had increased from RMB 14.07 billion in 2008 to RMB 231.86 billion in 2013. In addition, management of water conservancy, environment and public facilities, and public management, social security and social organization are the two main industrial sectors which drive the most direct economical benefits. This paper also forecasts the impact of the South-to-North Water Division Project on Beijing's various industrial sectors by 2020. Based on our analysis, this paper puts forward policy recommendations to further improve the efficiency of water usage in Beijing.

Quantifying Water Scarcity in Northern China Within the Context of Climatic and Societal Changes and South‐to‐North Water Diversion

“…For example, Lin et al (2012) assessed the environmental benefit of the SNWTP and reported the total eco‐environmental benefits 38 billion RMB/year, while the eco‐economic benefit of delivered water in Hebei water‐recipient area was 5.526 billion RMB/year (Wang et al, 2018). For industrial sectors, the direct economic benefit generated by the SNWD to Beijing will be 38.72 billion RMB/year (Gao & Yu, 2018). Although there is a certain gap between our estimation and previous studies, there are in the same order of magnitude.…”

Optimal Multi-Sectoral Water Resources Allocation Based on Economic Evaluation Considering the Environmental Flow Requirements: A Case Study of Yellow River Basin

“…The model coefficients A 0 , A 1 , A 2 , α i , β i , σ i are estimated from Equations ( 4), ( 6) and (8). The economic value of water for agricultural, industrial, and public water uses are estimated by isolating the marginal contribution of water to the total output value [10,36,37,39,45]. The marginal value can be obtained by the partial derivative of the production function with respect to water for three water use sectors following Equations ( 5), ( 7) and (9).…”

“…It can lay the foundation for reaching a consensus on sharing the limited water supplies between different demand sectors to help achieve a balance between water supply and demand [29]. Regarding the evaluation of the economic value of different water sectors, existing research has focused more on how to measure the economic value of agricultural and industrial water use [10,[30][31][32][33][34][35][36][37], while fewer discussions have been conducted on domestic (public) water sectors as well as urban ecological water sector [38,39].…”

“…Nevertheless, this kind of method is susceptible to the limitation of data availability as it has relative high data requirements. However, the C-D production function is widely used to represent the amount of output that can be produced by multiple inputs including water use and non-water supplies; meanwhile, the marginal value of unit water for different sectors can be further evaluated to represent the economic value of different sectors [10,36,37,39,45]. Domestic water use is essential in terms of human needs because domestic water uses such as drinking, food preparation and hygiene are critical to daily life.…”

Water resources research to support a sustainable China

“…The serious water crisis in northern China prompted the implementation of the South-to-North Water Diversion Project. The Middle Route of this project has been operational since 2008 and is providing freshwater to some large cities in northern China (Gao & Yu, 2018). However, this project is highly susceptible to water pollution, as pointed out by Lei, Zheng, Shang, and Wang (2018).…”