PROGRESS IN GEOGRAPHY ›› 2008, Vol. 27 ›› Issue (3): 141-151.doi: 10.11820/dlkxjz.2008.03.020

• Original Articles • Previous Articles     Next Articles

Simulation of Water Policy for Beijing Based on CGE Model

DENG Qun1,2, XIA Jun1, YANG Jun3, SUN Yangbo1,2   

  1. 1. Insititue of Geography Science and Natural Resources, Chinese Academy of Science, Beijing 100101;
    2. Graduate University of Chinese Academy of Science, Beijing 100001;
    3. Agriculture Policy Research Center of Chinese Academy of Science, Beijing 100101
  • Received:2008-02-01 Revised:2008-05-01 Online:2008-05-25 Published:2008-05-25


Due to climate change,uneven distribution of precipitation and diversified geo - conditions, Beijing is facing serious water problems. Now this negative impact tendency develops increasingly fast due to population boost, rapid GDP growth and urbanization. Governments and international communities encourage solving those water crises by means of integrated river basin management and urban water system innovation. It has become a must to give a deep research of water resource economics for sustainable development and promoting social market functions. Water prices and waster water fees are two major factors in water resource economics analysis and give a great impact on national economy. Most researchers have used part equilibrium model to analyze relationship between water price, GDP growth and industry output. But in some cases, it would give unreasonable results according to some experts research. For this reason, scientists are using general equilibrium model to analyze the change of GDP and industry output affected by water resource policies. GEMPACK soft package is a wonderful calculation tool for CGE model. The paper builds 43*53- sector input- output table for water CGE model. In this paper the authors use it to simulate Beijing water resource policy. The paper researches four aspects: first, factors which affect water resource policy; second, rules of water supply and demand; third, evaluating water resource and building water resources input and output table; and fourth, establishing water CGE model and simulating water policy by GEMPACK software. The innovations also focus on such issues. The simulation gives two scenarios: (1) increase water price by 10 percent; and (2) increase water quantity by 10 percent. The results are as follows according the simulation: 1) Water resource policy affects GDP and industry output Water resource is a strategic social economical resource and it will affect industry output and commodity production. There are different behaviors in different industries as to the water policy. Agriculture has the same tendency as water price change and it is more sensitive to water quantity than to water price. So water saving technology gives more contribution to agriculture and should be given more priority. For basic energy industries such as Oil, Chemistry and Gas, they show diversity tendency: some of them would increase while others will decrease when increasing water price or quantity. As to some high water consuming industries such as Paper and Textile, water resource economic policy can affect them greatly and can promote them to accomplish more water- saving technology. Waste water and Construction and Service industries show the same tendency as water policy. 2) Government should pay more attention to water resource policy by macro economic administration The simulation also shows that the output and supply and consumer prices change more than expected as to water policy for water industry in a free market economy. So government policy makers should be more carefully to prepare suitable forecasts and plans for water policies and their negative impacts. The paper achieves simulation of water policies by using CGE model and GEMPACK software and the result will give theoretic and practical suggestions to urban water price innovation and policy decision.

Key words: Beijing, CGE model, economic policy, water resources