Abstract
Water rights trading is an effective way to promote the redistribution of agricultural water saving within and among water-shortage regions. Reasonable transfer price can not only improve the income of farmers and irrigation areas, but also improve the efficiency of agricultural water use. However, the trading across industries or regions will diminish the ecosystem service value of arable land, and negatively impacts irrigation areas. This paper investigates the pricing model of agricultural water transaction, which combines water trading with ecological compensation to balance the benefits of both parties. A bi-level programming model of agricultural water trading was established for optimizing the prices and corresponding volumes of transaction across users in water markets. The context of this study is the Inner Mongolia Autonomous Region, which is a typical water-shortage region in China. Results show that adjusting price variables through the model, including transaction price and ecological compensation, led to an optimization of transaction volumes across users. The economic benefits also are optimized between the irrigation districts and industrial water users. Pricing model of water trading is also improved with ecological compensation. This study ultimately provides a useful reference for policy-makers in water-shortage regions.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Data availability
The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.
References
Adam L, Sarah AW, Claire S (2018) Private transaction costs of water trade in the Murray-Darling Basin. Ecol Econ 146:560–573. https://doi.org/10.1016/j.ecolecon.2017.12.004
Alvaro C, Katrin R, Tol RSJ (2010) The economic impact of more sustainable water use in agriculture: a computable general equilibrium analysis. J Hydrol 384:292–305. https://doi.org/10.1016/j.jhydrol.2009.12.012
Alxa statistics bureau (2017) Alxa year book. Alxa press
Bayannur press (2017) Erdos statistics bureau. Erdos year book 2017. Erdos press
Bayannur statistics bureau (2017) Bayannur year book 2017. Bayannur press
Bekchanov M, Bhaduri A, Ringler C (2015) Potential gains from water rights trading in the Aral Sea Basin. J Agric Water Manage 152:41–56. https://doi.org/10.1016/j.agwat.2014.12.011
Bethany C, Lin C, Nicholas P (2014) Best practice pricing principles and the politics of water pricing. Agr Water Manage 145:92–97. https://doi.org/10.1016/j.agwat.2014.01.011
Cao X, Wang YB, Wu PT, Zhao XN, Wang J (2015) An evaluation of the water utilization and grain production of irrigated and rain-fed croplands in China. Sci Total Environ 529:10–20. https://doi.org/10.1016/j.scitotenv.2015.05.050
Dang Q, Megan K, Jeffrey JR, Giuliano DB, Lin XW, Zeng RJ (2016) A theoretical model of water and trade. Adv Water Resour 89:32–41. https://doi.org/10.1016/j.advwatres.2015.12.016
David L, Hang Z (2018) How could water markets like Australia’s work in China? Int J Water Resour D. https://doi.org/10.1080/07900627.2018.1457514
Delorit JD, Block PJ (2018) Promoting competitive water resource use efficiency at the water-market scale: an intercooperative demand equilibrium-based approach to water trading. Water Resour Res 58:5394–5421. https://doi.org/10.1029/2017WR022323
Deng XH, Xua ZM, Song XY, Zhou J (2017) Transaction costs associated with agricultural water trading in the Heihe River Basin, Northwest China. Agr Water Manage 186:29–39. https://doi.org/10.1016/j.agwat.2017.02.021
Deng XH, Song XY, Xu ZM (2018) Transaction costs, modes, and scales from agricultural to industrial water rights trading in an inland river basin, Northwest China. Water 10:1598. https://doi.org/10.3390/w10111598
Dustin G, Stuart MW, Anthea C (2013) Understanding the evolution and performance of water markets and allocation policy: a transaction costs analysis framework. Ecol Econ 88:195–205. https://doi.org/10.1016/j.ecolecon.2012.12.010
Etoa JBE (2011) An enumeration sequential linear programming algorithm for bilevel programming with linear constraints. Pac J Optim 7(1):139–162. https://doi.org/10.1016/j.obhdp.2010.08.003
Jadwiga RZ (2015) Shadow price of water for irrigation—a case of the High Plains. Agr Water Manage 153:20–31. https://doi.org/10.1016/j.agwat.2015.01.024
Janis C, David L, Sunding DZ (2002) Transaction costs and trading behavior in an immature water market. Environ Dev Econ 7:733–750. https://doi.org/10.1017/S1355770X0200044X
Jedidiah B, Robert G, Alan K, Gary L (2008) 2006 Presidential address water markets in the west: prices, trading, and contractual forms. Econ Inq 46:91–112. https://doi.org/10.1111/j.1465-7295.2007.00072.x
Jiang YK, Cai WJ, Du PF, Pan WQ, Wang C (2015) Virtual water in interprovincial trade with implications for China’s water policy. J Clean Prod 87:655–665. https://doi.org/10.1016/j.jclepro.2014.10.074
Jon S, Jonathan M (2012) A framework for valuing water in England and Wales. Util Policy 23:13–30. https://doi.org/10.1016/j.jup.2012.07.006
Jonathan P, Sergei S (2015) Predicting inter-season price jumps in the market for temporary water allocations. J Hydrol 525:676–683. https://doi.org/10.1016/j.jhydrol.2015.03.064
Kampas A, Petsakos A, Rozakis S (2012) Price induced irrigation water saving: unraveling conflicts and synergies between European agricultural and water policies for a Greek Water District. Agr Syst 113:28–38. https://doi.org/10.1016/j.agsy.2012.07.003
Kate AB, Gretchen CD, Kaeo TD, Harold AM (2007) The nature and value of ecosystem services: an overview highlighting hydrologic services. Annu Rev Env Resour 32:67–98. https://doi.org/10.1146/annurev.energy.32.031306.102758
Kovacevic RM, Pflug GC (2014) Electricity swing option pricing by stochastic bilevel optimization: a survey and new approaches. Eur J Oper Res 237:389–403. https://doi.org/10.1016/j.ejor.2013.12.029
Liu LH, Yang BR (2019) Research on ecological compensation of provincial cultivated land in China. China Popul, Resour Environ 29:52–62
Luo B, Huang GH, Zou Y, Yin YY (2007) Toward quantifying the effectiveness of water trading under uncertainty. J Environ Manage 83:181–190. https://doi.org/10.1016/j.jenvman.2006.02.002
Maher MJ, Zhang X, Vliet DV (2001) A bi-level programming approach for trip matrix estimation and traffic control problems with stochastic user equilibrium link flows. Trans Res B-Meth 35:23–40. https://doi.org/10.1016/S0191-2615(00)00017-5
Mampiti M, Rashid H (2006) Integrated ecological economics accounting approach to evaluation of inter-basin water transfers: an application to the Lesotho Highlands Water Project. Ecol Econ 60:246–259. https://doi.org/10.1016/j.ecolecon.2005.12.010
María M, Guillermo D (2016) Water scarcity and affordability in urban water pricing: a case study of Chile. Util Policy 43:107–116. https://doi.org/10.1016/j.jup.2016.04.014
Prakashan CV, Stijn S, Aymen F, Jeroen B, Guido VH (2011) Complementarity between water pricing, water rights and local water governance: a Bayesian analysis of choice behaviour of farmers in the Krishna river basin, India. J Ecol Econ 70:1756–1766. https://doi.org/10.1016/j.ecolecon.2011.04.018
Robert B, Edwyna H (2014) Price leadership and information transmission in Australian water allocation markets. J Agric Water Manag 145:83–91. https://doi.org/10.1016/j.agwat.2013.10.010
Sarah W, Dustin G, Adam L, Henning B (2013) Evaluating water market products to acquire water for the environment in Australia. Land Use Policy 30:427–436. https://doi.org/10.1016/j.landusepol.2012.04.004
Shahbaz K, Dharma D, Shahbaz M, Munir AH (2010) Predicting water allocations and trading prices to assist water markets. Irrig Drain 59:388–403. https://doi.org/10.1002/ird.535
Sheila MO (2014) Climate change adaptation and water resource management: a review of the literature. Energ Econ 46:500–509. https://doi.org/10.1016/j.eneco.2013.09.005
Shen XB, Lin BQ (2017) The shadow prices and demand elasticities of agricultural water in China: a StoNED-based analysis. Resour Conserv Recy 127:21–28. https://doi.org/10.1016/j.resconrec.2017.08.010
Tai N, Shahbaz M, Adam L, Kate RS, Duc-Anh AV, Duc NC, Thanh TC (2018) Predicting water allocation trade prices using a hybrid artificial neural network-Bayesian modelling approach. Hydrol 567:781–791. https://doi.org/10.1016/j.jhydrol.2017.11.049
Taro T, Hideo A, Ge YC, Ma MG, Yasuhiro N, Takeshi S, Wang WZ, Nanae Y (2013) Agricultural water trade under farmland fragmentation: a simulation analysis of an irrigation district in northwestern China. J Agric Water Manag 122:63–66. https://doi.org/10.1016/j.agwat.2013.03.005
Theodore P (1994) Economic instruments for environmental management and sustainability development. UNEP
Wang YH (2012) A simulation of water markets with transaction costs. Agr Water Manage 103:54–61. https://doi.org/10.1016/j.agwat.2011.10.017
Wang ZY (2018) Permit trading with flow pollution and stock pollution. J Environ Econ Manag 91:118–132. https://doi.org/10.1016/j.jeem.2018.07.002
Wang YB, Liu D, Cao XC, Yang ZY, Song JF, Chen DY, Sun SK (2017) Agricultural water rights trading and virtual water export compensation coupling model: a case study of an irrigation district in China. J Agric Water Manag 180:99–106. https://doi.org/10.1016/j.agwat.2016.11.006
Wheeler S, Loch A, Zuo A, Bjornlund H (2014) Reviewing the adoption and impact of water markets in the Murray-Darling Basin, Australia. J Hydrol 518:28–41. https://doi.org/10.1016/j.jhydrol.2013.09.019
Wuhai statistics bureau. Wuhai year book 2017. Wuhai press
Xu TT, Zheng H, Zhao JS, Liu YC, Tang PZ, Yang YCE, Wang ZG (2018) A two-phase model for trade matching and price setting in double auction water markets. Water Resour Res 54:2999–3017. https://doi.org/10.1002/2017WR021231
Zhang GZ, Xie XT, Yang GB, Li S (2011) Analytical Study on protective price of water trading for valley city. Energy Procedia 5:241–249. https://doi.org/10.1016/j.egypro.2011.03.043
Zhao J, Ni HZ, Peng XJ, Li JF, Chen GF, Liu JH (2016) Impact of water price reform on water conservation and economic growth in China. Econ Anal Pol 51:90–103. https://doi.org/10.1016/j.eap.2016.06.003
Zhou Q, Wu F, Zhang Q (2015) Is irrigation water price an effective leverage for water management? An Empirical Study in the Middle Reaches of the Heihe River Basin. Phys Chem Earth 89–90:25–32. https://doi.org/10.1016/j.pce.2015.09.002
Funding
The research was supported by the Humanities and Social Sciences Youth Foundation, Ministry of Education of the People’s Republic of China (No. 21YJCZH206); the National Natural Science Foundation of China (No. 71774048, 41701610); the Key Project of Philosophy and Social Science Research of Universities in Jiangsu Province (No. 2018SJZDI048).
Author information
Authors and Affiliations
Contributions
Min Zhu designed the research and drafted the manuscript; Qian wen Yu conducted the model simulation; Lina Zhang revised the manuscript. And Qian wen Yu is recognized as the corresponding author.
Corresponding author
Ethics declarations
Ethics approval
Not applicable.
Consent to participate
Not applicable.
Consent to publish
Not applicable.
Competing interests
The authors declare no competing interests.
Additional information
Responsible Editor: Philippe Garrigues
Publisher's note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Zhu, M., Yu, Q. & Zhang, L. Pricing model of agricultural water rights trading in water-shortage region, China. Environ Sci Pollut Res 30, 22000–22012 (2023). https://doi.org/10.1007/s11356-022-23317-w
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-022-23317-w