Assessing the economic impact of North China’s water scarcity mitigation strategy : a multi - region, water - extended computable general equilibrium analysis

This paper describes a multi-region computable general equilibrium model for analyzing the effectiveness of measures and policies for mitigating North China’s water scarcity with respect to three different groups of scenarios. The findings suggest that a reduction in groundwater use would negatively affect economic growth and household incomes. A planned water-transfer project would improve economic development and reduce the over-exploitation of local water resources, while water demand management policies would improve water-use efficiency through reallocating water to those sectors having a higher marginal product value. Several important policy implications are drawn from these findings.