The impact of South-to-North Water Transfers Project on de-agriculturalization of water resources in receiving area
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Abstract:
Water is regarded as a fundamental resource for human society's development. China is recognized as one of the 21 most water-poor and water-scarce countries in the world. This is particularly evident in the Yellow River Basin, where there is a significant imbalance between water supply and demand. To mitigate the water scarcity in the northern region, China constructed the South-to-North Water Transfers Project (SNWTP), thus representing a cross-basin and cross-regional water resources allocation initiative. The severe water shortage predicament in the receiving areas was notably improved by the opening of both the central and eastern routes of the SNWTP. Furthermore, as China progressed with its industrialization and urbanization, a substantial portion of agricultural water was redirected towards non-agricultural purposes, thereby driving an ongoing increase in non-agricultural water demand. Considering the exogenous impact of the SNWTP, it had the potential to either stimulate or hinder the non-agriculturalization of water resources in the receiving areas, while simultaneously addressing water resource constraints. As a result, to empirically investigate, the precise impact of the opening of the SNWTP on the non-agriculturalization of water resources in the receiving areas remained uncertain and warranted further investigation. The impact of the opening of the SNWTP on the non-agriculturalization of water resources in the receiving areas is assessed in terms of scale and degree using a time-varying differences-in-differences model based on provincial panel data from the year 2003 to 2021. Robustness tests such as parallel trend test, placebo test, exclusion of other policy interferences, propensity score matching, controlling for time trend, heterogeneity treatment effect and Bacon decomposition are conducted on this basis. The opening of the SNWTP has been shown to have a positive impact on both the scale and degree of non-agricultural water resource use in the receiving areas. Robust tests have confirmed that this conclusion is consistently valid. The primary mechanism behind this effect is the increase in surface water and other water supplies, while the impact on groundwater was found to be negligible. Furthermore, significant regional differences exist in how the SNWTP influences non-agricultural water resource use. The project has a notably stronger effect on the central route compared to the eastern route. Additionally, the specific impacts of the project include an increase in industrial water usage and a decrease in agricultural water usage. Over time, the cumulative effects of the SNWTP on the de-agriculturalization of water resources in the receiving areas are evident in GDP growth, an increase in the hierarchical coefficient of the industrial structure, and positive changes in both surface and groundwater levels. It is recommended to strengthen the rational use of non-agricultural water to promote industrial development. Surface water protection should be strengthened and a sound water resources management system should be established. The water resource management in the central line area should be strengthened and the cross-border management of water resources should be promoted. Finally, the structure of industrial water use is optimized, the management of domestic water use is strengthened, the ecological protection and restoration is reinforced, and the efficiency of agricultural water use is improved. The empirical evidence provided by the findings of this paper can be used to promote the high-quality development of the SNWT follow-up project. Further exploration could be conducted in follow-up studies regarding the impacts of the SNWTP on quality and efficiency issues of non-agricultural water use in the receiving areas, the long-term impacts of the SNWTP on local ecosystems, and the impacts of the SNWT on food security.
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