Economic Analysis of China's Water System - Fudan University Young Economists' Library

Author: Liu Wei
Publisher:
Publish Date: 2005-09-01
Features: Water institution research is an interdisciplinary subject that involves cross-cutting and mutual penetration. This book applies the theory of new institutional economics, from the perspective of international comparison and historical evolution, to examine and analyze the global water institution changes and their trends, as well as the historical evolution of China's water institutions. By constructing a multi-mechanism coexisting water allocation model, it forms a multi-level framework for analyzing China's water institutions. The book also conducts an in-depth study and analysis of three supporting institutional arrangements: China's water pricing system, water rights and water market system, and water user organization system. Using the basic framework of China's water institutions under the river basin context, it conducts empirical analysis on the Zhangye case in the Heihe River Basin, the Yellow River drought, and the South-to-North Water Diversion Project. The author argues that China's water shortage is superficially a resource crisis but essentially a institutional shortage, stemming from the long-term failure of water management institutions, which has led to low governance capacity and an inability to effectively respond to various challenges under changing conditions. Therefore, institutional innovation is the fundamental solution to China's water shortage. The research in this book shows:
1. The world is undergoing a water institution transition from a supply-side management model centered on development to a demand-side management model centered on allocation, and China's water institutions are at the initial stage of this transformation.
2. Water has multiple complex characteristics, including natural, economic, and social aspects, and water resource property rights have various forms of hierarchical structures, requiring the adoption of a multi-mechanism coexisting water allocation system led by government, market, and water user organizations to overcome government failure, market failure, technical failure, and externalities.
3. Water law, water policy, and water administration are three integral components of China's water institutions, with the water rights system being the core.
4. The water pricing system, water rights and water market system, and water user organization system are the three supporting institutional arrangements of China's market-oriented water institutions, playing a central role in forming mechanisms that incentivize and constrain water conservation.
5. Case studies demonstrate that China's market-oriented water institutions have enormous potential for water conservation and institutional benefits, solving the institutional shortage problem and thereby addressing China's water shortage issue.