COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS ON DOMESTIC TRADABLE PERMITS FOR WATER RESOURCE MANAGEMENT IN YELLOW RIVER BASIN

Abstract

  In Yellow river basin, water demand is increasing because of rapid economic growth and, especially in the downstream region, lack of water resource is one of the serious problems. In this paper, domestic tradable permits for water resource management, which is called as cap and trade type, is focused on, and a CGE model which can evaluate economic impacts of the domestic tradable permits. And then, the CGE model is calibrated in Yellow river basin and the impact analysis is tried by the CGE model. As the results of this analysis, in the case of 5% reduction of water resource in all Yellow river basin, the following things are cleared; 1) water demand is decreased relatively in up-and midstream regions and water rights are purchased in the downstream region, 2) in up-and midstream regions, agricultural production is decreased and production of mining, manufacturing and service is increased, 3) in the case of grandfathering rule, utility level trends to be improved in the regions where water resource is in less effective use.