The number of privately owned wells in China has been on the rise since the 1990s, and while the trend has benefitted farmers, it has had a less positive impact on groundwater resources, according to research presented at a recent workshop hosted by the Institute of Water Policy in Singapore.
Prior to the 1990s, villages owned wells, according to University of Minnesota Associate Professor Huang Quiqiong, who has researched the impact of policy changes on water management practices in China.
Huang told participants at the Innovations in Water Policy Workshop that the growth in the number of private wells has increased crop yields and benefitted poor farmers as well as rich ones.
However, when village leaders were in charge, villages may have had an incentive to conserve water resources, while when private individuals sink their own wells, they may not be as concerned about water use, Huang warned.
She compared water use, and found that the demand for water is indeed driven by well ownership. She also found that the impact depends on the nature of the aquifer, as water usage by villages is 40 percent higher if aquifers are connected.
When villages pump from the same aquifer as their neighbor, for example, they may go back to a common property resource regime and there may not be an incentive to conserve.
The conclusion, Huang said, is that village leaders do conserve groundwater compared to private well management, depending on the type of aquifer.
Her presentation was based on research she and her collaborators conducted, using interviews and data about water management practices and privatization in 80 villages in three provinces over the past dozen years.
Huang and her team looked at surface water management, including the transfer from village collective management to management by institutions such as water user associations. They found that there is more transparency about fees collected and water use when an association or contractor is responsible for canals. There is also a reduction in water usage if managers receive an incentive to reduce it, since water user associations can make money from water savings.
Huang found that these user associations improved maintenance, delivered water in a more timely fashion and collected a higher percentage of fees for water use. But, she noted, there are differences in the structure of water user associations in China compared to other countries. Whereas they are supposed to be farmer-based associations, farmers in China contribute labor or cash but do not participate in the management of water resources and are not involved in decision-making.
A major factor affecting reliability of water supply is incentives, she said. Under collective management, revenue goes to the village account and not to the village leader. Under water user associations, part of the revenue goes to the village leader’s own income so they have an incentive to collect the fees. Collection rates also depend on quality of services, so there is a link between water supply reliability and fees.
She tried to evaluate the policy effectiveness of other measures the government has put in place, including irrigation management reform. Up to 2004, China used a command-and-control approach. Since then, the government has used a market approach, and that may make the transfer from rural to urban more successful, she said.
The government has also tried to promote water-saving technology. Huang said she did not study water saving technology because the water price is low in rural areas. She and her team are concerned about is whether there is real water savings with these technologies, and whether there is a rebound effect from a lower price of water leading farmers to increase use.
When the researchers looked at the potential for increasing water prices and the impact on water use, they first estimated the value of water to farmers and then looked at profit maximization from multiple crops.
They also looked at the total change in household income and calculated the value of water, compared with the cost of water that farmers pay. The only cost to farmers is to pump water out, Huang said, since they do not pay for water itself. If the price of water increases, there would be a reduction in use, she concluded.
While there are differences in the sensitivity of farmers to changes in water prices, the results of their simulation showed that prices need to increase from about $0.24 USD per cubic meter to about $0.70 USD to achieve a 30 percent reduction target.
Pricing changes can be difficult to make, and it is not certain that water pricing policy is effective, she said, because the government is trying to increase income and cannot increase pricing in isolation.