Analysis of Direct Subsidy Policies for Agricultural Water Fees

Direct subsidies for agricultural water fees are important for resolving issues with agricultural water fees and prompting comprehensive reform of agricultural water prices.According to the reform policies on agricultural water prices,there are different models of water prices.In this paper,we analyze the subsidies and calculation methods of every model.In order to collect information on agricultural water fees,we carried out a field study on 36 irrigation areas in 18 provinces,and used census data on 551 irrigation areas in 26 provinces.Based on this data,we calculated the water fee subsidy demand for all irrigation areas.A subsidy scheme is suggested based on a comparison of annual financial income.Direct subsidy mechanisms should be established in order to meet the objectives of improving agricultural comprehensive production capacity,ensuring food security,promoting water conservation,alleviating the burden on farmers and achieving sound operation of water conservancy projects.The basic condition of water fee subsidies is to implement a two-part water price,including both a basic water fee and a metered water fee,with the goal of compensating for policy flaws and basic water fees.Four subsidy schemes are compared.Under Scheme 1,adjust the water price to reach the level of compensation for all costs,and then subsidize the base portion of the adjusted water fee.Under Scheme 2,water prices are not adjusted,and subsidies cover policy shortcomings and the base portion of the current water fee.Scheme 3 is a modification of Scheme 1,under which there is a subsidy of additional expenditure to farmers in order to not increase the burden on farmers.Under Scheme 4,water prices are not adjusted and subsidies only cover the base portion of current water fees.Based on estimates for the different schemes,the demand for water fee subsidies for all irrigation areas in China is 5.25 to 24.55 billion yuan,with demand from large and medium-sized irrigation areas in the main grain-producing provinces accounting for 1.32 to 5.82 billion yuan.In the near future,it is expected that allocations of the annual central government budget for direct farmer subsidies will be more than 52.3 billion yuan,which would be able to meet the demand for water fee subsidies.Taking into account difficulties in raising the price of water,we proposed that the current level of water prices be maintained.The policy shortfall and basic water fee under the rational water quota would be subsidized by fiscal revenues,and water users would only pay for the metered water fee.The subsidy should be carried out gradually,with priority given to the large and medium-sized irrigation areas of the main agriculture-producing provinces.