Water, Vol. 15, Pages 4179: Estimating the Economic Effect of the South-to-North Water Transfer Project on Beijing—An Applied Computable General Equilibrium Analysis

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Water, Vol. 15, Pages 4179: Estimating the Economic Effect of the South-to-North Water Transfer Project on Beijing—An Applied Computable General Equilibrium Analysis

Water doi: 10.3390/w15234179

Authors: Yinsheng Xu Yanjie Bi Jing Zhao Jingjing Duan

What exactly is the contribution of the South-to-North Water Transfer Project (SNWTP)? This is a subject of much debate. There are concerns about the possible effects on the macroeconomy. Most previous studies have tried to answer this question. In order to answer this question quantitatively, it is necessary to separate the effect of SNWTP from many influencing factors. A computable general equilibrium model (SICGE) was built to estimate the economic effect of the South-to-North Water Transfer Project on Beijing. This CGE model was modified by joining the subdivided water substitution module, the total water constraints module, and the water-capital substitution module. Two scenarios were set: one with SNWTP and one without SNWTP. The what-if scenario (without SNWTP) indicates that the water reduction poses a direct threat to economic growth. Employment, capital, and GDP are lower, largely due to water shortages suffered by many industries by comparative analysis with or without SNWTP. The water utilization for the water-intensive industry will decrease the most, and its output will also decrease the most. Without SNWTP, groundwater extraction will increase, which suggests that SNWTP water will tentatively replace groundwater.

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