ARTICLE IN PRESS

Global Environmental Change 18 (2008) 617–625

Contents lists available at ScienceDirect

Global Environmental Change

0959-37

doi:10.1

� Corr

E-m1 Bu

on the T

journal homepage: www.elsevier.com/locate/gloenvcha

Pricing China’s irrigation water

Michael Webber �, Jon Barnett, Brian Finlayson, Mark Wang

School of Anthropology, Geography and Environmental Studies, The University of Melbourne, Victoria 3010, Australia

a r t i c l e i n f o

Article history:

Received 11 December 2007

Received in revised form

25 July 2008

Accepted 29 July 2008

Keywords:

China

Water

Irrigation

Pricing

Market

Institution

80/$ - see front matter & 2008 Elsevier Ltd. A

016/j.gloenvcha.2008.07.014

esponding author. Tel.: +613 8344 3171; fax:

ail address: mjwebber@unimelb.edu.au (M. W

t similar problems afflict other northern and

arim basin, see Wang and Wang (2005).

a b s t r a c t

Many development agencies and other actors are advocating that China adopt a system of water

markets or of high water prices in order to resolve the inefficiencies of irrigation agriculture and to

supply sufficient water for growing urban and industrial uses. We argue that this proposal rests on a

series of propositions: that the price of water is too low to encourage farmers to be efficient; that

farmers are not charged volumetric prices and so are not encouraged to conserve water; that water is

scarce largely because farmers are profligate in their use of water; and that proper pricing of water will

not affect equity. None of these contentions is true. Farmers have to pay not only the official charges for

water but also the much higher costs of pumping it onto their fields. Once pumping is included, farmers

are paying prices that are volumetric. Furthermore, the inefficiency of farmers arises in large part from

the manner in which water is delivered to them: the system offers no rewards for care in the use of

water and instead rewards greed. And, finally, although it might be true that higher prices do not affect

equity within a village, in fact they would have substantial effects on inter-sectoral equity, with farmers

becoming worse off in comparison to urban dwellers. The paper concludes by sketching a more

appropriate scheme for raising the efficiency of use of irrigation water.

& 2008 Elsevier Ltd. All rights reserved.

1. Introduction

There is a general understanding that China is short of water.The average amount of water per person in China is only2300–2400 m3/year, about one quarter of the world average(Falkenmark et al., 1989; Shi and Xu, 2001). This problem isrecognised locally (Wang and Lall, 2002), internationally (Lohmaret al., 2003) and institutionally (Wang et al., 2004). Water scarcityis most intense in northern China, particularly the North ChinaPlain, where agriculture, industry and municipalities demandmore water than is available (World Bank, 2000a, b, 2001, 2005;see also Yang and Zehnder, 2001). The problem is most acute inthree north-central river basins: the Hai, the Huai and the Huang(Yellow) River Basins (Lohmar et al., 2003), where, according tothe World Bank (2001, p. 51), renewable water availability is only358–750 m3/person/year; the problem is compounded by pollu-tion, falling groundwater levels, land subsidence and sea waterintrusion (Mei and Dregne, 2001).1 The problems have arisen inpart because of agricultural intensification in northern China, butmostly because of rapidly growing urban and industrial demand,

ll rights reserved.

+613 9349 4218.

ebber).

inland basins; for example,

with scarcity being accentuated by high levels of contaminants(Webber et al., 2008). Water shortages in China’s important grain-producing regions may significantly affect agricultural production(Lohmar et al., 2003), potentially provoking food crises (Brown,2004). There is, therefore, a growing clamour for measures torestrict the growth of demand, particularly to reallocate waterfrom supposedly inefficient agricultural uses to the rapidlyincreasing industrial and urban users (Xinhua, 2004).

There is a general understanding, especially in agencies ofdevelopment and aid that the best solution to this problem is toprice water through a market. The Asian Development Bankadvocates this solution:

[ADB] will support the evolution of water allocation throughmarkets of transferable water rights once the necessary policy,legal, and institutional frameworks for [Integrated WaterResources Management] in a river basin context have beenput in place (ADB, 2003, pp. 18–19).

Governments and civil society need to see water as aneconomic good. Financial incentives for optimising water usewill be strengthened through a mix of water charges, market-based instruments, and penalties. y Managing water demandis a function of efficient pricing, effective regulation, andappropriate education and awareness. ADB will promote tariffreforms through its water-related projects and programs tomodify structures and rates so that they reward conservationand penalize waste (ADB, 2003, pp. 24–25).

ARTICLE IN PRESS

M. Webber et al. / Global Environmental Change 18 (2008) 617–625618

The World Bank, in strategic statements (World Bank, 2002)2

and the design of individual projects for China (World Bank,2000a, b),3 makes the same comments: low water charges andthe lack of accurate water measurement and volumetric watercharging have resulted in inefficient use of water resources. Itargues that there is, therefore, a need for institutional reformin China that incorporates: the user pays principle, decentralisa-tion of service delivery, market oriented development, treatmentof water as a valuable economic resource, water measurementand volumetric water charging, and participation of water users.In this view, the development banks are supported by environmen-talists (Brown, 2001),4 international resource management institu-tions (Hussain, 2005), national aid agencies (for example, Norway’s:Hansen and Bhatia, 2004) and many economists (including He andChen, 2004; Ehrensperger, 2004; Rosegrant et al., 2005).

They are also joined by Chinese agencies of water manage-ment. Since 1999, the Yellow River Conservancy Commission(YRCC) has sought to manage water scarcity in the Yellow Riverbasin by: engineering measures; raising water prices; moving to asystem of water rights transfers (Li, 2005)5 and actively support-ing research on the manner in which such systems operate inAustralia and the USA (Tong and Zhang, 2005). The Xinjiang TarimBasin River Management Bureau of the YRCC has since 2003stipulated a surface water allocation for prefectures and theXinjiang Production Corps as a prelude to trading in water rights(Wang and Wang, 2005). Academics in law and management call forproperty rights in water to be established (Liu and Dong, 2005), inhydrology propose models of net welfare to set prices (Shao et al.,2005), and in public administration suggest that the price of waterto farmers be raised to cover costs (Mao, 2005).

It is the aim of this paper to explain the weaknesses inproposals to use markets to resolve water shortages in northernChina; the critique leads us to identify practices that could raisethe efficiency with which irrigation water is used. We do notdiscuss the bureaucratic processes and interest coalitions thatgive rise to water policy in China (though some of these arerelevant, and we are trying to influence policy). Nor do we analysethe discourses surrounding water policy in China, though some ofthese are important to policy proposals. The paper is not a critiqueof markets for water per se (on which, see Barlow and Clarke,2003; Shiva, 2002). Nor do we intend that our arguments applyelsewhere, even though many of the proponents of water marketsare international institutions. Instead, we make an argument fromthe particular circumstances of the North China Plain and ofirrigation agriculture that uses surface water.6 We do intend toexplain at a variety of levels how pricing models do not fit thecircumstances of contemporary northern China: instruments needto be appropriate to circumstances, even if we grant the need tosupply increasing amounts of water to the burgeoning cities andindustries of the north.

We begin by identifying the models that might be followedwhen pricing water and their purported benefits. These sectionsare general rather than specific to China, since the benefits ofmarkets are themselves theoretical. However, the principal pointof the paper is to make three claims about the foundations of

2 The Bank does note that the current lack of defined rights prohibits market

pricing or water trading.3 One of the main outcome indicators for project CNPE56516 is to be the

implementation of volumetric water charges.4 Who comments that trying to raise the price of water in China is like trying

to raise the price of gasoline in the United States.5 Li GuoYing is a commissioner of the Yellow River Conservancy Commission,

Ministry of Water Resources, China.6 The arguments about water pricing for urban consumers are quite different;

the water crisis in southern China is about flooding and quality, not about

shortage; and we just do not know enough about other societies.

arguments about the value of markets to resolve water shortages.The first (Section 3) is that the concept of water rights, uponwhich pricing and trading depend, is alien to the administrativecircumstances of Chinese farmers; next, we argue that thediscursive framework of the debate casts the farmers as theculprits of inefficient water use whereas the principal problem isone of inefficient water administration bureaucracies (Section 4);and finally, we contend that higher water prices in effect representa tax on farmers, who are as a group already the poorest membersof Chinese society (Section 5). The paper concludes by isolatingthe preconditions for more efficient use of water for irrigation innorthern China and the classes of measures that might meet thosepreconditions.

The paper draws on a variety of sources. First is a literature thatargues the benefits of markets and/or pricing for water demandmanagement; this literature is commonly theoretical, and isoften generalised to a variety of developing countries, not justChina. Secondly, we draw on econometric and other secondaryevidence about water demand and supply conditions withinChina. And thirdly, we draw on our own experience. Wehave spent more than a decade talking to farmers across northernChina about a variety of issues, including water management;the locations include the rural fringes of Beijing and Shanghai;Shandong (Jinan municipality and Dongying); Henan (Zhengzhoumunicipality); Inner Mongolia (both on the steppes and southof Hohhot); and Shaanxi (the rural areas of Yulin and Yan’ancities). In these places, we have collected information (by surveyand observation) on cropping practices, the system of wateradministration in villages, the prices paid for water, methods andtiming of irrigation, irrigation volumes, pumping costs and attitudesto market pricing. For this paper we have also discussed similarissues with water managers (principally the provincial Bureaus ofthe YRCC in Zhengzhou and Jinan), municipality administrations inHohhot, Zengzhou and Jinan, and local academics.

2. For prices

In 2000 at The Hague, the World Water Council adopted as a‘‘Vision’’ the proposition that water should be charged at full costto all users. There is, however, a variety of ways of pricing water.

Water in a river is a resource, delivered to farmers via anirrigation infrastructure. The price that Chinese farmers arecharged for the water they use on their farms typically combinesa resource fee and an infrastructure charge. A resource fee seeks tocapture the opportunity cost of water in a river in its bestalternative use (which may include environmental flows). Aninfrastructure charge is the fee charged for delivering water fromthe river to farmers’ fields, including the capital cost ofconstructing, operating and maintaining an irrigation system.In China as in most places, such prices are set by the state,though in principle private organisations could be given thisright. The charge to farmers for irrigated water can be set inseveral ways:

1.

Area: either a fixed price per hectare of irrigated land (perhapswith a quota) or different fixed prices per hectare of‘subsistence’ land and ‘above-subsistence’ land;

2.

Crop: a variable price, depending on either the crop grownor the season (or both), possibly with a lower price forsubsistence crops;

3.

Volumetric: a fixed or variable price per unit of water deliveredto a farm;

4.

Multipart: volumetric pricing at the level of, say, a village,combined with area or crop pricing within the village (Hussain,2005, pp. 63–65).

ARTICLE IN PRESS

M. Webber et al. / Global Environmental Change 18 (2008) 617–625 619

that farmers use. In principle, though, the most effective way of

7 According to Wang and Huang (2000), industrial prices are two-three times

agricultural prices in the south and up to ten times in the north.

All these prices tend to restrict the aggregate amount of water

restricting the use of water by irrigation farmers is to chargevolumetric prices for the water they use. Since irrigationinfrastructure has high fixed costs, volumetric charges may needto be supplemented by fixed fees (see Johansson, 2000).

A special form of volumetric price is a price equal to themarginal cost of supplying water, including the social (scarcity)value of water in a river, infrastructure and maintenance, andadministration. If farmers are rational and have perfect informa-tion, then in theory they produce the highest return for theamount of water supplied (Johansson, 2000). If this price is thesame across all sectors, inter-sectoral allocations are efficient inthis sense, too.

Markets can determine prices, under particular conditions(Dinar and Mody, 2004; Easter et al., 1997). First, users of waterfrom a river have rights to a certain volume of water per period—ayear, a quarter or a season—separate from the right to use land.Second, the right to some or all of the water can legally and inpractice be sold to others (by ‘in practice’ we mean that the watercan actually be moved from the seller to the buyer). Third, amanagement system exists that resolves conflicts over externaleffects (such as return flows and pollution), fluctuations in riverflow and the rights of in-stream users. Finally, rights and contractsare legally enforceable and trading is not too costly. If there are noexternalities from the use of water, all parties are fully informed,there is complete certainty, competition is perfect and there arenon-increasing returns to scale, then water markets efficientlyallocate water: the price paid by users equals the marginal cost ofsupply and equals the marginal productivity of water for users(Dinar and Mody, 2004; Johansson, 2000). If such a water marketexists, water prices are determined by it.

Even if some of these conditions are not met, a rights-basedsystem of water transfers could, it is argued, equitably improvethe efficiency of water use (Easter et al., 1999)—that is, values ofoutput per cubic metre could be raised. Users have an incentive toconserve water, for the saved water can be sold, increasing thesupply of water to locations and sectors where demand and abilityto pay are greatest. The system is equitable because those whoseconsumption decreases (and so whose production falls) arecompensated by the sale of water. If the sum of all use rights(including environmental flows) is equal to or less than supply,and if rights are adjusted to natural variations in supply, then atradeable water rights system is also sustainable (Easter et al.,1998, 1999; Rosegrant and Binswanger, 2004). In practice, thecosts of designing and administering a transfer market increase asthe number of rights-holders increases, so the scale of allocationsis important: use rights and transfer rights could be assigned toprovinces, counties, townships, villages, or individuals, whichcould then sub-allocate rights to users within their domain–multiple markets at different scales under various jurisdictionsare possible.

Thus, the first claim is that if water prices are quasi-volumetricand near to marginal costs, then water use is efficient. A centralbody can set these prices, but a system of tradeable water rightsalso achieves such benefits. Secondly, if prices are approximatelyequal to costs, they facilitate appropriate levels of investment andmaintenance. Related to this claim is a third: enhanced invest-ment and maintenance improve water services to farmers—thusthe broad package of price changes does not harm the poor. As theAsian Development Bank puts it: the evidence from scores ofwater projects is that the poor are increasingly willing to pay forservices that are predictable and effective (ADB, 2003, p. 25; seealso Hansen and Bhatia, 2004). Thus, it is argued, reforms do notharm poor consumers and often improve their access to water(Clarke and Wallsten, 2002). Higher charges for irrigation water

help recover the cost of providing water delivery service; give anincentive for efficient use of scarce water resources; and act as abenefit tax on those receiving water services, providing resourcesfor further investment to the benefit of others (Perry, 2001;see also Cai and Rosegrant, 2004), all without affecting equity(Tsur and Dinar, 1995).

In China, actual prices charged for irrigation water are thoughtto be well below levels that are efficient (i.e., that markets wouldset). Prices do not even cover the full costs of operating andmaintaining irrigation systems (Hussain, 2005; Wang et al., 2004;Yang et al., 2003). The price of irrigation water varies across thecountry, being generally lower in the south (RMB0.02–0.03/m3 inprovinces like Guangdong and Chongqing) than in the north(RMB0.10–0.14/m3 in provinces like Gansu and Shanxi) but isgenerally one half-one third of the cost of supply (Zhou and Wei,2002).7 Other estimates differ, but also claim that existing pricesare less than costs (Shi and Xu, 2001; World Bank, 2000b), despitesteep increases in the price of water in the Huang He basin in thelast five years (YRCC, 2001). A computable general equilibriummodel estimates that the market price for water in China shouldhave been nearly RMB4.00/m3 in 2000, about thirty times thehighest prices now paid for surface water by irrigation farmers(He and Chen, 2004). Partly as a consequence of these differencesbetween the price and the cost (or the value) of water, variousactors in China’s complex water resource management structure,including the Ministry of Water Resources, are considering themerits of a system of transferable water rights (Lohmar et al.,2003). Indeed, in principle the establishment of water markets isnow possible after the revised national Water Law came into forcein late 2002 (Yuan and Chen, 2005). In 2003 the YRCC establishedfive pilot water right transfer projects in Ningxia and InnerMongolia (Yuan and Chen, 2005), permitting factories to investin water-saving irrigation technology and buy from irrigationdistricts the water thus saved.

Yet these arguments, that tradeable water rights or marginalcost pricing are the key to successful management of water,are applied in country after country in Asia and elsewhere;they are simply replicated in China by the ADB, the World Bank,foreign experts, western-trained Chinese economists and engi-neers, and the central agencies of water management in China(such as the Ministry of Water Resources). The identificationof problems is the same for China as for the UK or the USA; thesolutions proposed are the same too, despite their differentphysical, economic, social, legal and institutional conditions.The water problems in China may indeed be similar to those inwestern Europe; however, solutions that work efficientlyin western Europe may be inefficient or ineffective in China(Biswas, 2001). We now turn to consider these differentconditions.

3. The theoretical issue

The YRCC’s pilot water right transfer projects in Ningxia andInner Mongolia reveal several problems that impede effectiverights-based transfers (Yuan and Chen, 2005). These problemsinclude the fact that the original water rights are unclear; thequestionable legality of transferable water rights; imprecise rulesabout transfers; lack of agreement on the roles of the variousbureaus involved; and lack of agreement about who shouldsupervise transfers and enforce rules (Yuan and Chen, 2005).

ARTICLE IN PRESS

9 Though the Huang He basin is associated with water shortage, we have

found consistent evidence of water logging and the associated salinisation of soils

in areas within Jinan municipality that are irrigated from the Huang He.10 Local hydrogeologic knowledge is vital. For example, some of the most

sophisticated analyses of the preconditions for a water market discuss the

M. Webber et al. / Global Environmental Change 18 (2008) 617–625620

These issues reflect deeper incompatibilities between waterresource management in liberal democracies and in China.

Evidence of the potential benefits of a system of transferablewater rights in China comes from liberal-democratic countriessuch as the USA and Australia. There, systems of transferablewater rights have improved the efficiency of water use, but arenew and remain imperfect (Dinar and Mody, 2004; Matthews,2004; Pigram, 1999; Smith, 1998) and have to be very carefullytailored to local institutional and environmental conditions(Haddad, 2000b). Yet, even if this policy instrument works insome countries, it will not necessarily work in China: externallydriven solutions to water problems in developing countries tendto correct the least relevant problems in the least practical way(Biswas, 2001; Pigram, 1999). The potential for such a system oftransferable water rights in China needs to be assessed againstChina’s different political structure, national goals, legal system,degree of rural development, property rights institutions, resourcemanagement capacity, and water demand and supply. So, manyproponents of tradeable water rights, including advocates of theiruse in China, stress that important preconditions must bemet—especially institutional preconditions (Haddad, 2000a;Matthews, 2004; Perry et al., 1997). Lacking these preconditions,a system of transferable water rights may do more harm thangood to water users and the environment (Perry et al., 1997).

Foremost among these preconditions is a secure and transpar-ent property right in water that is independent of rights to land.Informal market systems may suffice for effective exchange ofgroundwater and temporary trades of water (Easter et al., 1998,1999). However, formal water rights are mandatory if there are tobe trades of permanent rights of water whose use entails returnflows to the environment (including irrigation by surface water).The rights must be assigned to the bodies that are tradingwater—farmers, if the system is individual; or villages orirrigation districts, if trading is collective.8 This entails laws thatassign rights, legal systems that enforce those rights and punishthose who transgress on the rights of others, and a transparentsystem that all users understand and have access to informationabout (Easter et al., 1999; Matthews, 2004). Participants, includingfarmers and their collectives, must be comfortable with the ideaof rights, and have faith in the systems that make and enforcethe rules.

None of these conditions is evident in China. Civil and politicalrights are generally effectively upheld only in liberal-democraticsocieties (if then) and their meaning is not always commensuratewith, and their application not always effective in, other politicalsystems. This is particularly true of China, where the idea ofnatural rights is problematic, and the legal authority that candetermine rights almost always favours the rights of the State overthe rights of the individual (Yu, 2005) and of higher levelinstitutions over local authorities. Thus the formal system ofproperty rights in China is mixed and indeterminate: individuals’‘right’ to land is only a use right which is legally far from secure(Ho, 2001; Liu, 2005). In the living memory of almost all farmersin China the overwhelming fact is that resources may be excisedby the State at any time: the inalienable character of basic rights,that is the ideal of western countries, is far from Chinese practice.For example, the 2002 water law states clearly that all rights tosurface and groundwater belong to the State and that water ismanaged by various authorities on behalf of the State. Even themost basic right to water is the product of de facto rather thande jure arrangements (Lohmar et al., 2003; Schlager and Ostrom,

8 On transmitting collective incentives downward to individual farmers, see

Wang et al. (2003); on the position of villages and irrigation districts in the water

management system, see Section 4.

1992). Indeed, a measure of the distance between the reality inChina and the ideal of a functional system of water rights is therecent argument that people should have a right to participate

in water resources management, a right they do not now have(Liu, 2005).

In other words, there are no transparent and secure rights towater in China. Proponents of water markets (Lohmar et al., 2003;see also Tong and Zhang, 2005) argue that a necessary first step isto establish such rights, apparently not recognising that the lack ofsecure rights to water is in itself a cause of many of China’s watermanagement problems: we observe some users getting more thanthey need, others not enough; the timing of releases not matchingdemand; and almost all users taking more than they need whenwater is available. The paradox is that if water rights were clearand secure then water would be used far more efficiently thannow and a market to transfer rights might be unnecessary. Asystem of water use rights that is independent of the State, secure,enforceable, and legitimate (trusted by all parties) would enhancethe efficiency with which farmers use water, whether or not userights are transferable. However, such a system is far fromactuality (according to Xia and Sun, 2005, the allocation of waterrights is a key bottleneck) and may not be realisable under theChinese party-State.

There is a variety of other preconditions for a system oftransferable rights. These include: separation of water rights fromland rights; laws that set out how rights can be traded and asystem to enforce those laws; laws to establish a clear hierarchyamong different rights; infrastructure to transfer water amongusers in different locations; institutions to monitor and regulate,preventing adverse effects on third parties; and a legal system tocreate an avenue for disaffected parties to seek recourse, possiblyincluding an ombudsman to protect the public interest (Dinar andMody, 2004; Easter et al., 1998; Lohmar et al., 2003; Matthews,2004: Perry et al., 1997). These preconditions must be metwhether the rights are assigned to individual farmers or tocollectives, such as irrigation districts.

A system of transferable rights also demands detailed knowl-edge of the physical flow of water through a system (from sourcesto users), including the use of groundwater and return flows; ofwhere there is too little water and where there is too much9; ofwhere the largest losses of water occur in the system—and inChina all this information needs to be at a spatial resolution that isfar finer than is required in regions of low population density, likerural USA or Australia.10 Our observations on the north China plainindicate that at least a half of water withdrawn from the river islost to evaporation and seepage from unlined irrigation canals—aproblem that a system of transferable water rights will not in itselfsolve (Xu, 2001). The manner in which water moves in a systemhas significant implications for the best system of management:one system of management cannot fit all places equally well(Perry et al., 1997; Haddad, 2000a).

Furthermore, systems of transferable water rights are premisedon the idea that water is an economic good. In China the bulk ofwater consumption does serve private economic uses. Agricultureaccounts for 70–80 per cent of water use (Liu and Chen, 2001),

implications for market and pricing systems of return flows–excess water from

farms and seepage from irrigation canals that serves to recharge groundwater

systems or returns to the river (Briscoe, 1996; Perry et al., 1997). However, the

Huang He below Zhengzhou is perched above the flood plain and excess water

flows into other basins, such as the Huai He; furthermore, in much of Shandong

the problem is a groundwater table that is too high rather than too low.

ARTICLE IN PRESS

M. Webber et al. / Global Environmental Change 18 (2008) 617–625 621

and industrial users account for most of the rest. Agriculture’sshare is consumed by hundreds of millions of small farmers whoirrigate their crops. Despite the fact that these farmers increas-ingly sell their produce commercially, however, the system andthe activities of farmers have significant public benefits. Forexample, rural landlessness in China is low (McKinley, 1996), ratesof poverty are low and falling rapidly (Stern, 2002; Wang et al.,2004), food production has grown faster than population(although grain production has been kept stable) so thatdomestically produced food is cheap,11 and the rate of rural tourban migration is arguably lower than it would be if farmerswere not able partly to secure their livelihoods from the land. Thecapacity of China’s farmers to apply water to land and producesubsistence and commercial food acts as a floor on urban wages, arural social security system.12

In other words, while water is ostensibly an economic good inagriculture, it has significant indirect public good functions. Wateralso has important non-economic values, such as for publichealth, ecosystem health, recreation, landscapes, gardens andother domestic micro-enterprises, and religious and culturalceremonies—all of which may be ignored or not well served bya rights-based transfer system (Meinzen-Dick and Bakker, 1999).The underlying assumption of rights-based transfer systems (thatwater is an economic good) thus needs to be carefully considered(Barlow, 2001; Briscoe, 1996; Chambers, 1988; Kasrils, 2001;Shiva, 2002). If we imagine Chinese society to be a collection ofautonomous and rational individual actors,13 a rights-basedtransfer system may increase the efficiency with which water isused, at least from the perspective of those who can most makemoney from it. However, if we imagine Chinese society assomething more than the sum of its individuals, then China isnot so obviously well served by such a system. As one peasant,educated to the end of high school, in Wujialiang village nearYulin (Shaanxi) put it to us, if water is commodified then its usewill be dominated by the rich, even though it’s a right for all, andecosystem effects will be ignored.

The imagination of society is important in other ways. At theheart of market-based models of resource allocation is animaginary of the ‘universal society’, according to which actualsocieties are—or should be-comprised of rational individualsacting to maximise their welfare. This methodological individu-alism holds that all social phenomena are explicable in terms ofthe ways that individuals act. It ignores or at best downplays thesignificance of the State, institutions, power relations, culture,history, and non-economic values (Brohman, 1995). Methodolo-gical individualism underpins much of modern social science, andis central to almost all economic and political approaches to policyformulation and implementation; yet it is highly problematiceven as a model of relatively atomistic, affluent, rights-based,liberal-democratic countries, let alone for China where the State isparamount, history matters, and collectivities still play significantsocial roles. Time after time we observe that the activities ofindividuals, private enterprises and the state are complexlyintertwined, so that individual commercial decision-taking isnot separable from institutional supervision: in the Yangzi delta,southeast of Shanghai, Langxia township has absorbed much ofthe communal land, established a development corporation to

11 And it reduces demand for grain on the world market, avoiding the kinds of

price rises that were feared by Brown (1995).12 As one casual worker from Zhuanyaogou village (near Ansai, Shannxi) who

worked as a construction labourer in Yulin (Shaanxi) put it to us: if I become

unemployed, I can come home, live with my parents, help them out, and wait for a

‘phone call from my boss.13 Whether individual farmers or their collectives (such as villages or

irrigation districts).

lease that land to agricultural research enterprises and univer-sities, and encouraged farmers to intensify their production ofrice, fruit and milk, while at the same time prettifying theirvillages to attract tourists to stay in the homes of those samefarmers; in Beidaolaban and countless similar villages acrossHuhehaote prefecture (Inner Mongolia), the Autonomous Regionalgovernment and large (private) urban milk-processors are en-couraging peasants to switch from traditional crops to intensivemilk production. These developments all involve various arms ofthe state, private corporations and individual peasants in devel-opment projects, so tightly bound together that individualdecision-taking is irrelevant. In China as in many other places, itis likely that water markets will be restricted to informal and localtrades (see Briscoe, 1996; Dinar et al., 1997) and are likely to beinstituted at a collective level rather than by individual farmers.

Market-based mechanisms are only one of many possibleinstruments for implementing resource management policy(Dovers, 1995). Of these, given the State’s strong regulatorycapacity, and people’s familiarity with regulation as a policyinstrument in other aspects of Chinese life, a regulatory approachseems to be more practical than the use of market mechanisms(even so, the allocation and enforcement of clear water use rightsmight beneficial). Likewise, given that the bulk of water is lostthrough evaporation and seepage from irrigation canals, watersavings are more likely to be achieved by widely applying low-cost technologies to minimise this loss rather than using a blunttool such as transferable water rights.

4. Framing the culprits

Marginal cost pricing and water trading work to increasetechnical and allocative efficiencies only if the practices of farmersare the principal reason for water being used inefficientlyin China. The language is one of inefficient farmers—they useflood irrigation rather than drips and sprinklers; they grow lowvalue crops with water; they apply too much water; they do nottime water applications properly. The story is repeated in theChinese press (Yu, 2004), among irrigation engineers and plantbreeders (Kijne et al., 2003; Tuong and Bouman, 2003) and amongeconomists (Cai and Rosegrant, 2004). Some commentatorsare more sympathetic, arguing that water-saving irrigationpractices and technology are not widely used because there areno incentives in place for farmers to benefit directly from savingwater (Lohmar et al., 2003). The result of this discourse isdevelopment projects that seek to change irrigation practiceson farms—such as the World Bank’s water conservation project onthe north China plain (Beijing, Hebei, Liaoning, Shandong)(for details see World Bank, 2000a, b). The implication is clear:many, if not most of the problems lie at the farm level and are thefault of farmers.

However, the management of surface water for irrigationreveals a different story. We observe a system that is in chaos. Theproblem, perhaps is not so much resource scarcity as scarcity ofappropriate management (Lu et al., nd; Yang and Zehnder,2001).14 At an institutional level there exist the confusions anduncertainties associated with the tiao-tiao-kuai-kuai structure ofgovernance in China. The detailed management of irrigationdistricts also provides little scope for farmers to modify theirirrigation practices.

14 Since the principal Chinese proponents of market-like trading in water

rights are the Ministry of Water Resources and its river basin management

authorities like the YRCC, this is not a popular argument within Chinese water

management circles.

ARTICLE IN PRESS

15 This is an observation that we have not found repeated in policy circles or in

empirical research on agricultural economics in China. In fact, the actual elasticity

of demand for water, e ¼ e0 (p+p1)/p, where e0 is the estimated elasticity, p1 is the

pumping and other costs the farmers have to pay, and p is the direct price of water.

M. Webber et al. / Global Environmental Change 18 (2008) 617–625622

The institutions that manage surface water in China are manyand complexly linked (Hou, 2000; Lohmar et al., 2003; Lu et al.,nd; Zhou and Wei, 2002). Consider the Shandong Bureau of theYRCC, with which we have worked. It ‘belongs’ to the YRCC, one ofa set of national river basin commissions, whose primary task is toapprove and enforce provincial water withdrawal plans. In turn,the YRCC is an agency of the Ministry of Water Resources, which isitself responsible for planning, constructing, and managing allwater-related projects including flood control, power generation,water transport, domestic water treatment, and industrial wateruse in addition to irrigation; the bureaus under the Ministry areresponsible for managing plans of higher level agencies and foradministering water resource systems. In other words, a vertical(or tiao tiao) structure channels commands from State Councilthrough central government ministries (such as the Ministry ofWater Resources), to water resource bureaus at provincial,prefectural, county and township levels. Individual irrigationdistricts report to their appropriate water resources bureau.

At each level of government, the management of water alsorequires cooperation between the different agencies that areresponsible for different functions: this is horizontal cooperation(or kuai kuai). The line of power flowing from the Ministry ofWater Resources is supplemented by lines from the StateEnvironmental Protection Administration (wastewater, pollution),the Ministry of Geology and Mining (groundwater), the State PriceBureau (prices), the Ministry of Construction (urban waterdelivery) and the Ministry of Agriculture (onfarm technologies).These agencies and their subordinate bureaus must cooperatewithin the central government and within each province,prefecture and county. At each level, goals for social and economicdevelopment are set by the government at that level, into whichmust fit the activities of the functional agencies.

The Shandong Bureau is thus located in a matrix. Power flowsfrom high ranking agencies (YRCC) and a demand for cooperationflows from equivalent ranking agencies in the same government(Shandong Province). This system generates conflicts (Lu et al., nd)between different users (urban and rural consumers are served bydifferent agencies); between different sources of supply (groundand surface water are administered separately); between supplyand conservation; between national, basin, provincial and locallevels of government; and between flood protection (prevention),water supply and pollution control. Some conflicts are delicatelydescribed by Liao and Xiao (2005). In many respects, this systemoperates to force irrigation farmers to use as much wateras possible.

Consider the level of provinces. The Shandong Bureau, forexample, tells us that there is a stated allocation of water toprovinces; but the allocations are periodically revised and subjectto exceptional circumstances (such as drought). Since the Bureaudoes not receive as large an allocation as it seeks, it competes withother Bureaus for water and, fearing that it will lose some of itsallocation in the future, uses all of (or more) of its allocation toensure that the same amount is allocated next year. Other Bureausare in the same competitive game. Down within Shandong, we seea similar competitive ethic forcing irrigation districts to use alltheir allocations too.

Consider also the level of an irrigation district. In someirrigation districts, managers are given explicit incentives toconserve water (Wang et al., 2003). In many, though, theprocedure is like that we observe within Jinan municipality,Shandong, Local governments can tell the Shandong Bureau howmuch water they want and when; yet the amount and timing ofreleases from the Huang He into the irrigation canals are entirelyat the discretion of the YRCC. Water flows into an irrigation canalfor a fixed period that is determined by the YRCC and flowsthrough the distribution canals to the last farmers in the district.

Farmers have to use water when it is made available, even if theydo not need it. The first farmers along the distribution canals usewhat they want or need; some is then lost to seepage; the rest isavailable to the next farmers along the canal.

As we see these farmers irrigate, they do not have the option ofbeing more efficient users of water. There is no water storage inthe system, so water applications cannot be timed; farmerscannot reduce applications now to use more later. Since farmersare charged for water on an areal basis, any reductions in their useof water translate into yield reductions but no monetary savings.In other words the language of blame needs to be reframed: theinefficiency lies in the system of water management. The YRCCgives no managers or farmers incentives—indeed, gives themlittle opportunity—to save water.

5. Taxing farmers

Within the paradigm of methodological individualism, theability of prices to regulate water use depends on the priceelasticity of demand. Estimates of the price elasticity of demandfor irrigation water in China range from �0.35 to �0.41 (Wanget al., 2005) to �0.11 (Cai and Rosegrant, 2004). Whatever theprecise number, elasticities are low, implying that a doubling ofthe price of water would lead to a 10–40 per cent reduction in use.There are several reasons why the price elasticity of demand forirrigation water is so low.

First, at very high levels of application of water, more waterreduces yields (Fraiture et al., 2002). Beyond a certain point wateris subject to negative marginal returns, not diminishing marginalreturns. Even at very low prices, farmers may not use all the waterthey can get. Thus, if prices are low, an increase in price may havelittle effect on the use of water, since it is not prices that constrainuse but the shape of the production function.

Secondly, farmers may be subject to legal or de facto waterrationing, which restricts their applications of water to sub-optimal levels (Fraiture et al., 2002). Such rationing includes canaldimension and pump capacity, and means that the use of water inChinese agriculture is in aggregate well below the demand curve(Ehrensperger, 2004). Again, this means that water is rationed bycommand rather than by price, and moderate changes in pricemay not influence farmers’ decisions.

Thirdly, though, the price charged for water is only onecomponent of the cost paid by farmers for water. Standardcomponents include the water resource fee and the fees paid fordelivery (infrastructure capital costs, operations and mainte-nance). In addition, when water is drawn from a river on the northChina plain, the water in irrigation channels is below ground leveland is gravity fed, so farmers have to pay to pump the water uponto their land. For example, we observed farmers in Beidongvillage (Jinan, Shandong) paying an average of about RMB5.00per mu per year for water; but they paid another RMB95.00 permu per year for diesel to pump that water from the canal andanother RMB60.00 per mu for the pumps (amortised over fiveyears). In other words, estimated price elasticities are not forresource and infrastructure fees but for the very much largerresource plus infrastructure fees and pumping costs.15

Such data prompt three conclusions about the costs ofirrigation water in northern China. First, all farmers who have topay to pump water—whether from the ground or from acanal—are in effect paying a volumetric charge for water. Since

ARTICLE IN PRESS

M. Webber et al. / Global Environmental Change 18 (2008) 617–625 623

pumping costs are many times greater than the resource andinfrastructure fees, this means that their water charges arealready largely volumetric. Therefore, to the extent that themanagement system permits farmers to consciously plan theiruse of water, they are already making decisions about the use ofwater that reflect a comparison of prices and returns. Either suchfarmers are already using water efficiently or the price mechan-ism is not working to direct their choice of technique. Secondly,farmers are paying a very high price indeed for their irrigationwater. Some farmers in Beidong were paying 10 per cent of theirgross annual household incomes for water. Although the pub-lished prices of water in northern China are RMB0.10–0.15/m3, theeffective price paid by these farmers is over RMB3.00/m3, slightlyhigher than the price paid by residents of Melbourne forhousehold water (Essential Services Commission, 2005). Theseimplications of pumping costs seem to have escaped theproponents of market prices for water. Thirdly, since elasticitiesare so low, any price increase is effectively a tax on farmers forlittle return in water saved. If the price elasticity of demand forwater is �0.1, a 100 per cent increase in the price of watertranslates into a 10 per cent saving in water, a 90 per cent increasein costs and some reduction in output. One forecast, based on datafor Shanxi province, estimated that a tenfold increase in the priceof surface water would reduce social welfare by 39 per cent eventhough farmers would increasingly turn to groundwater (Fang andNuppenau, 2004). Since farmers are the poorest group in China,especially in north China, it seems especially unreasonable to taxthem in this manner (compare Ahmad, 2000; Molle, 2001; Perry,2001). Proponents of market prices for irrigation water thus haveto propose income subsidies (that are independent of water) tocompensate farmers for such losses.

16 As one referee astutely observed.

6. Conclusions

Our evidence and argument prompt two different kinds ofconclusions. The first concerns the nature of the claims that aremade about the efficiency of irrigated agriculture in northernChina; the second reflects more positively on the nature of thesolutions to water scarcity that might work and be equitable.

The claims that are made about the use of water by irrigationfarmers in northern China include the contentions that the priceof water is too low to encourage farmers to be efficient; farmersare not charged volumetric prices and so they are not encouragedto conserve water; water is scarce in large part because farmersare profligate in their use of water; and proper pricing of waterwill not affect equity. None of these contentions is true. Farmershave to pay not only the official charges for water but also thecosts of pumping it onto their fields; these latter charges might be30 times the official price of water and raise the effective price ofwater to levels comparable to those in water-scarce developedcountries. Once pumping is included, farmers are paying pricesthat are volumetric: the more water they pump, the more theypay. Furthermore, the inefficiency of farmers arises in large partfrom the manner in which water is delivered to them: the systemoffers no rewards for care in the use of water and instead rewardsgreed. And, finally, although it might be true that higher prices donot affect equity within a village, in fact they would havesubstantial effects on inter-sectoral equity, with farmers becom-ing worse off in comparison to urban dwellers.

This summary implies that an appropriate means of raising theefficiency with which irrigation water is used must be differentfrom the widely advocated model of universal pricing ofindividual farmers. Like Haddad (2000a), we do not reject theidea of rights and markets per se but seek to tailor them to fit thephysical, institutional, development, and social realities of north-

ern China. First, the fact that farmers who pump are already facing(high) volumetric prices implies that they already are givenincentives to irrigate as efficiently as they are able under currentinstitutional arrangements. Thus appropriate systems of manage-ment first need to be put into place and only then shouldadditional incentives be given to farmers to become more efficientusers of water. The critical criterion for an appropriate system ofmanagement is that it provides farmers with the ability to usewater efficiently if they choose. And, we have argued, thatcriterion is met if farmers (or groups of farmers) are allocatedwater rights, which themselves depend on storage systems thatenable farmers to use their water when they need it. If farmers orgroups have defined rights to water at times they need it, theyhave the capacity to use water efficiently—a capacity that they donot now have.

Once such a system of defined rights is established, then thequestion of price and efficiency can be addressed. The weakness ofpresent proposals for pricing irrigation water is that they intend tocharge farmers for use of water without providing them acompensatory income. This is the source of the inequity. Theappropriate solution would seem to be to provide farmers withthe right to sell their water to urban and other users at marketprices. However, allocating these rights is unlikely to work at anindividual level, since metering is impracticable and watermarkets are institutionally incompatible with social practice inChina. But it could be done collectively—at the level of anirrigation district, for example: the district sells some of its waterentitlement to the large cities of northern China. That income canthen be used to pay for the infrastructure that is needed to savethe estimated 50 per cent of China’s surface irrigation water thatis lost to seepage and evaporation in irrigation channels. Citiesbuy the water that they need; farmers are provided with thecapital with which to become more efficient users of water; theinequities of high prices are avoided. The markets thus establishedare local (between cities and nearby irrigation districts) and are atan appropriate scale (the irrigation district). Once such a system isin place, then and only then can the questions of water manage-ment at the scale of individual farmers be appropriatelyaddressed.

Whatever the design of the system of water transfers fromagriculture to urban-industrial users, it is critical that the moneytransfers occur at the same scale as is the principal source ininefficiency. In agriculture on the north China plain the principalsource of inefficiency is the loss of water in irrigation canals.The provincial bureaus of the YRCC and the irrigation districtswithin them are the managers of these canals. Money must betransferred to those bureaus and irrigation districts and all of itspent to reduce their seepage losses and raise their ability toprovide water when farmers need it. Otherwise, farmers will losewater. If, by contrast, compensation for water transfers is paiddirectly to farmers, there is no additional money with which themanagers of canals can pay to reduce the technical efficiencylosses, and agricultural output falls. (This is the fundamentalweakness of the market-prices-plus-compensation model.) Ifcompensation is paid to other agencies of government, there isno reason to suppose that it will be applied to reducing efficiencylosses in irrigation. Even if a market-like transfer of money forwater represents the best deal that farmers can get for what mightbe regarded as an inevitable loss of their present de facto rights towater,16 it is still critical that the transfers be designed in themanner we have indicated.

ARTICLE IN PRESS

M. Webber et al. / Global Environmental Change 18 (2008) 617–625624

References

ADB [Asian Development Bank], 2003. Water for All: The Water Policy of the AsianDevelopment Bank. Asian Development Bank, Manilla.

Ahmad, M., 2000. Water pricing and markets in the Near East: policy issues andoptions. Water Policy 2, 229–242.

Barlow, M., 2001. Commodification of water—the wrong prescription. WaterScience and Technology 43, 79–84.

Barlow, M., Clarke, T., 2003. Blue Gold: The Battle against Corporate Theft of theWorld’s Water. Earthscan, London.

Biswas, A.K., 2001. Missing and neglected links in water management. WaterScience and Technology 43, 45–50.

Briscoe, J., 1996. Water as an economic good: The idea and what it means inpractice. Paper presented to World Congress of ICID, Cairo, Egypt.

Brohman, J., 1995. Economism and critical silences in development studies: atheoretical critique of neoliberalism. Third World Quarterly 16, 297–318.

Brown, L., 1995. Who will Feed China? Wakeup Call for a Small Planet. WW Nortonand Company, New York and London.

Brown, L.R., 2001. How water scarcity will shape the new century. Water Scienceand Technology 43, 17–22.

Brown, L.R., 2004. China’s Shrinking Grain Harvest: How its Growing Grain Importswill Affect World Food Prices. Earth Policy Institute.

Cai, X.M., Rosegrant, M.W., 2004. Optional water development strategies for theYellow River Basin: balancing agricultural and ecological water demands.Water Resources Research 40, W08S04.

Chambers, R., 1988. Irrigation against rural poverty. In: Kanwar, J.S. (Ed.), NationalSeminar on Water Management—The Key to Developing Agriculture. AgricolePublishing Academy, New Delhi.

Clarke, G.R.G., Wallsten, S.J., 2002. Universal(ly bad) service-providing infrastruc-ture services to rural and poor urban consumers. World Bank Policy ResearchWorking Paper WPS 2868, Washington, DC.

Dinar, A., Mody, J., 2004. Irrigation water management policies: allocation andpricing principles and implementation experience. Natural Resources Forum28, 112–122.

Dinar, A., Rosegrant, M.W., Meinzen-Dick, R., 1997. Water allocation mechanisms:principles and examples. World Bank Policy Research Working Paper 1779,Washington, DC.

Dovers, S., 1995. Information, sustainability and policy. Australian Journal ofEnvironmental Management 2, 142–156.

Easter, K.W., Becker, N., Tsur, Y., 1997. Economic mechanisms for managing waterresources: pricing, permits, and markets. In: Biswas, A.K. (Ed.), WaterResources: Environmental Planning, Management and Development.McGraw-Hill, New York.

Easter, K., Rosengrant, M., Dinar, A. (Eds.), 1998. Markets for Water: Potential andPerformance. Kluwer, Boston.

Easter, K., Rosengrant, M., Dinar, A., 1999. Formal and informal markets for water:institutions, performance, and constraints. World Bank Research Observer 14,99–116.

Ehrensperger, D., 2004. Water Management in Rural China: The Role of IrrigationWater Charges. Technische Universitat Berlin, Institut fur Volkswirtschaft-slehre und Wirtschaftsrecht FG Umweltokonomie und Wirtschaftspolitik,Berlin.

Essential Services Commission, 2005. Metropolitan and Regional Businesses WaterPlans 2005–06–2007–08: Final Decision. Melbourne: ESC available at: /http://www.esc.vic.gov.au/water1001.htmlS.

Falkenmark, M., Lundqvist, J., Widstrand, C., 1989. Macro-scale water scarcityrequires micro-scale approaches: aspects of vulnerability in semi-ariddevelopment. Natural Resources Forum 13, 258–267.

Fang, L., Nuppenau, E.A., 2004. A spatial model (SWAM) for water efficiency andirrigation technology choices using GAMS—a case study from northwesternChina. Seventh Annual Conference on Global Economic Analysis, Washington,DC.

Fraiture, C.de., Perry, C., 2002. Why is irrigation water demand inelastic at lowprice ranges? Paper presented at the Conference on Irrigation Water Policies:Micro and Macro Considerations, Agadir Morocco, 15–17 June 2002.

Haddad, B.M., 2000a. Economic incentives for water conservation on the MontereyPeninsula: the market proposal. Journal of the American Water ResourcesAssociation 36, 1–15.

Haddad, B.M., 2000b. Rivers of Gold: Designing Markets to Allocate Water inCalifornia. Island Press.

Hansen, S., Bhatia, R., 2004. Water and Poverty in a Macro-Economic Context.Norwegian Ministry of the Environment, Oslo.

He, J., Chen, X.K., 2004. A dynamic computable general equilibrium modelto calculate shadow prices of water resources: implications for China,available at: /http://www.ecomod.net/conferences/iioa2004/iioa2004_papers/424.pdfS.

Ho, P., 2001. Who owns china’s land? policies, property rights and deliberateinstitutional ambiguity. The China Quarterly 166, 395–421.

Hou, E., 2000. Briefing paper on water governance structure in BeijingPRC,.University of British Colombia, Centre for Human Settlements, 3�3Beijing Tianjin Water Resources Management Project, Vancouver, BC.

Hussain, I., 2005. Pro-poor Intervention Strategies in Irrigated Agriculture in Asia.Poverty in Irrigated Agriculture: Issues, Lessons, Options and Guidelines-Bangladesh, China, India, Indonesia, Pakistan and Vietnam. International WaterManagement Institute, Colombo.

Johansson, R.C., 2000. Pricing Irrigation Water: A Literature Survey. World Bank,Washington, DC.

Kasrils, R., 2001. The value and price of water (The women of Lutsheko). WaterScience and Technology 43, 51–55.

Kijne, J.W., Barker, R., Molden, D., 2003. Water Productivity in Agriculture: Limitsand Opportunities for Improvement. CABI Comprehensive Assessment ofWater Management in Agriculture Series 1, Wallingford, UK.

Li, G.Y., 2005. Keeping healthy life of rivers—a case study of the Yellow River. In:YRCC (Ed.), Proceedings of the Second International Yellow River Forum, vol. I.Yellow River Conservancy Press, Zhengzhou, pp. 3–12.

Liao, Z.D., Xiao, M.H., 2005. Study on the integrated catchment managementstructure. In: YRCC (Ed.), Proceedings of the Second International Yellow RiverForum, vol. II. Yellow River Conservancy Press, Zhengzhou, pp. 335–342.

Liu, Y., 2005. On establishment of People’s right to participate in water resourcesmanagement. In: YRCC (Ed.), Proceedings of the Second International YellowRiver Forum, vol. I. Yellow River Conservancy Press, Zhengzhou, pp. 341–346.

Liu, C., Chen, Z. (Eds.), 2001. The Present Situation of China’s Water Resources andDemand Supply Trend Analysis. China Water Power Press, Beijing.

Liu, Y., Dong, F., 2005. Countermeasures on water resources’ sustainable utilizationin China. In: YRCC (Ed.), Proceedings of the Second International Yellow RiverForum, vol. II. Yellow River Conservancy Press, Zhengzhou, pp. 33–40.

Lohmar, B., Wang, J.X., Rozelle, S., Huang, J.K., Dawe, D., 2003. China’s AgriculturalWater Policy Reforms: Increasing Investment, Resolving Conflicts, and RevisingIncentives, Market and Trade Economics Division, Economic Research Service,U.S. Department of Agriculture, Agriculture Information Bulletin Number 782,Washington DC.

Lu, X.Y., Xu, F.L., Tao, S., Dawson, R.W., Li, B.G., Cao, J., Leaf, M., Hou, E. (nd). Currentsituation, defects, and future suggestions of institutional framework for waterresources management in China. University of British Colombia, Centre forHuman Settlements, 3�3 Beijing Tianjin Water Resources ManagementProject, Vancouver.

Mao, C.M., 2005. Analysis of the relation between the water price and water savingof the Yellow River. In: YRCC (Ed.), Proceedings of the Second InternationalYellow River Forum, vol. V. Yellow River Conservancy Press, Zhengzhou, pp.366–371.

Matthews, O., 2004. Fundamental questions about water rights and marketreallocation. Water Resources Research 40, W09S08.

McKinley, T., 1996. The Distribution of Wealth in Rural China. M E Sharpe, NewYork.

Mei, C.R., Dregne, H.E., 2001. Silt and the future development of China’s YellowRiver. The Geographical Journal 167, 7–22.

Meinzen-Dick, R., Bakker, M., 1999. Water Rights and Multiple Water Uses:Framework and Application to Kirindi Oya Irrigation System, Sri Lanka.International Food Policy Research Institute, EPTD Discussion Paper No 59,Washington, DC.

Molle, F., 2001. Economic tools for water demand management in Thailand:conventional wisdom and the real world. Paper presented to the ACIAR WaterPolicy Workshop 7–9 June 2001, Bangkok.

Perry, C., Rock, M., Seckler, D., 1997. Water as an economic good: A solution, or aproblem? International Irrigation Management Institute Research Report 14,Colombo.

Perry, C.J., 2001. Charging for irrigation water: the issues and options, with a casestudy from Iran. International Water Management Institute Research Report52, Colombo.

Pigram, J., 1999. Tradeable Water Rights: the Australian Experience. TaiwanInstitute for Economic Research, Taipei.

Rosegrant, M., Binswanger, H., 2004. Markets in tradeable water rights: potentialfor efficiency gains in developing country water resource allocation. WorldDevelopment 22, 1613–1625.

Rosegrant, M., Cai, X.M., Ringlerl, C., Cline, S., 2005. Market adaptations toincreased water prices in China: the impact on water demand and foodproduction. In: YRCC (Ed.), Proceedings of the Second International YellowRiver Forum, vol. V. Yellow River Conservancy Press, Zhengzhou, pp. 332–339.

Schlager, E., Ostrom, E., 1992. Property rights regimes and natural resources: aconceptual analysis. Land Economics 68, 249–262.

Shao, D.G., He, X.C., Huang, X.F., Zhang, P., 2005. The optimal allocation research ofwater resources based on water resources net welfare and the systemevolution. In: YRCC (Ed.), Proceedings of the Second International Yellow RiverForum, vol. II. Yellow River Conservancy Press, Zhengzhou, pp. 318–325.

Shi, Z.L., Xu, L.F., 2001. Water pricing policy in Tarim Basin of China. TsinghuaScience and Technology 6, 469–474.

Shiva, V., 2002. Water Wars: Privatization, Pollution, and Profit. South End Press,Cambridge, MA.

Smith, D., 1998. Water in Australia: Resources and Management. Oxford UniversityPress, Melbourne.

Stern, N., 2002. A Strategy for Development. World Bank, Washington, DC.Tsur, Y., Dinar, A., 1995. Efficiency and Equity Considerations in Pricing and

Allocating Irrigation Water. World Bank, Washington, DC.Tong, G.Q., Zhang, H.X., 2005. The illumination of Australia water right system

for the Yellow River. In: YRCC (Ed.), Proceedings of the Second InternationalYellow River Forum, vol. V. Yellow River Conservancy Press, Zhengzhou,pp. 380–385.

Tuong, T.P., Bouman, B.A.M., 2003. Rice production in water-scarce environments.In: Kijne, J.W., Barker, R., Molden, D. (Eds.), Water Productivity in Agriculture:Limits and Opportunities for Improvement. CABI Comprehensive Assessmentof Water Management in Agriculture Series 1, Wallingford, UK, pp. 13–42.

ARTICLE IN PRESS

M. Webber et al. / Global Environmental Change 18 (2008) 617–625 625

Wang, H., Lall, S., 2002. Valuing water for Chinese industries: a marginalproductivity analysis. Applied Economics 34, 759–765.

Wang, J.X., Huang, J.K., 2000. Water and institutional management systemat national and river basin’s levels in China. Retrieved 9 November 2005 from/http://www.ccap.org.cn/englishtalk/WP-00-E29.pdfS.

Wang, J.Z., Wang, F.Y., 2005. Preliminary exploration for sustaining Tarim River inhealthy life. In: YRCC (Ed.), Proceedings of the Second International YellowRiver Forum, vol. I. Yellow River Conservancy Press, Zhengzhou, pp. 59–66.

Wang, J.X., Xu, Z.G., Huang, J.K., Rozelle, S., 2003. Water management reform andwater use efficiency in China. Centre for Chinese Agricultural Policy ChineseAcademy of Sciences Working Paper WP-03-E15, Beijing.

Wang, J.X., Huang, J.K., Xu, Z.G., Rozelle, S., Hussain, I., Biltonen, E., Huang, Q.Q.,Msangi, S., 2004. Pro-poor intervention strategies in irrigated agriculture inAsia: issues and options. International Water Management Institute, CountryFinal Report–China, Colombo.

Wang, J.X., Huang, J.K., Zhang, L.J., Rozelle, S., Huang, Q.Q., Blanke, A., 2005.Understanding water crisis in northern China: what are government andproducers doing? Paper presented at the Second International Yellow RiverForum on Keeping Healthy Life of the River, 16-21 October, Zhengzhou.

Webber, M., Barnett, J., Wang, M., Finlayson, B., Dickinson, D., 2008. The YellowRiver in Transition, Environmental Science and Policy 11, 422–429.

World Bank, 2000a. China-Water Conservation Project CNPE56516. World Bank,Washington, DC.

World Bank, 2000b. Project Appraisal Document Water Conservation ProjectP056516. World Bank, Washington, DC.

World Bank, 2001. China: Air, Land, and Water. World Bank, Washington, DC.World Bank, 2002. China Country Water Resources Assistance Strategy. World

Bank, Washington, DC.

World Bank, 2005. Project Information Document: CN-Ningbo Water ManagementProject. World Bank, Washington, DC.

World Water Council, 2000. World Water Vision: Making Water Everybody’sBusiness. Earthscan, London.

Xia, J., Sun, Y.B., 2005. Study of the rationale, practices and methodology forkeeping healthy life of the Yellow River. In: YRCC (Ed.), Proceedings of theSecond International Yellow River Forum, vol. I. Yellow River ConservancyPress, Zhengzhou, pp. 67–76.

Xinhua, 2004. Saving water key for China to tackle water shortage crisis. People’sDaily Online June 25, 2004 website: /http://www.english.people.com.cnwww.english.people.com.cnS.

Xu, Z., 2001. Studying on increasing water use efficiency. Journal of China WaterResources August.

Yang, H., Zehnder, A.J.B., 2001. China’s regional water scarcity and implications forgrain supply and trade. Environment and Planning A 33, 79–95.

Yang, H., Zhang, X.H., Zehnder, A.J.B., 2003. Water scarcity, pricing mechanism andinstitutional reform in northern China irrigated agriculture. Agricultural WaterManagement 61, 143–161.

YRCC [Yellow River Conservation Commission], 2001. Report on Water Price Surveyin the Yellow River Basin. YRCC, Zhengzhou.

Yu, B., 2004. The shadow of water shortage. Beijing Review 47, 40–42.Yuan, D.L., Chen, L.J., 2005. Yellow River water right transfer system and practice.

In: YRCC, A. (Ed.), Proceedings of the Second International Yellow River Forum,vol. V. Yellow River Conservancy Press, Zhengzhou, pp. 323–331.

Zhou, Y.Z., Wei, B.C., 2002. Pricing of irrigation water in China. Paper presented atthe international conference on Irrigation Water Policies: Micro and MacroConsiderations, Agadir, 289.