Water Price Strategy Research Of Beijing Based On A CGE Model

Today, water shortage has become a widespread problem. The degree of watershortage of Beijing, whether in China or worldwide is in a quite serious situation. How tosolve the contradiction between supply and demand of water resource in Beijing, toensure the normal operation of the production and living, and to promote Beijing’seconomic, social and resource long-term sustainable development have become currentproblems to be solved. As the leverage in the process of allocating water resource, waterpricing strategy is particularly important.This paper first systematically reviews water pricing policies home and abroad, andthen analyzes the internal structure of the existing water prices in Beijing, the similaritiesand differences of the water prices among Beijing and other cities, the existing problemsand the affordability basing on the present situation of Beijing water resources and itswater resources allocation. Then, the paper builds the CGE Model of Beijing waterresources and does some policy simulations. In the part of model construction, water issatisfied as one of the producing factors and module equations have been modified on thebasis of the standard CGE model. In the part of model data, the paper compiles a BeijingSAM table based on Beijing input-output table of2007, Beijing Statistical Yearbook of2008, Beijing Tax Yearbook of2008as well as Beijing Finance Yearbook of2008. In thepart of policy simulations, the paper writes the GAMS code required by the simulationwith a basis of the model equations and simulates water pricing policies in Beijing fromboth the views of overall improving the price and the single department improving theprice using GAMS model. Finally, on the basis of theoretical analysis and policysimulation, a number of recommendations water pricing policies in Beijing are providedto help allocate the water resources rationally in Beijing.