The economic impact of water tax charges in China: a static computable general equilibrium analysis

Abstract

This paper presents a static computable general equilibrium model of the Chinese economy with water as an explicit factor of production. This model is used to assess the broad economic impact of a policy based on water demand management, using water tax charges as a policy-setting tool. It suggests that imposing water taxes can redistribute sectoral water use and lead to shifts in production, consumption, value added, and trade patterns. Another important finding is that water taxes imposed on the agricultural sector drive most of the effects.