A Market-Based Arid-Region Water Resources Planning Model: Application to the Guhai Water Distribution System, China

The arid regions in China, which own a pivotal position in national agriculture production, have confronted water supplying crisis triggered by the rapid growth of local economy. The Arid Zone of Ningxia Hui Autonomous Region (AZN) is one of the arid regions that severely suffer from water shortage. Since 1970s, local people has been relying on the water delivered from the Yellow River by water distribution systems, among which Guhai Water Distribution System (GWDS) is the largest and earliest one. Due to the limited capacity of GWDS and the decreasing precipitation caused by changing climate, the water availability in AZN is becoming scarcer. In recent years, emerging industrial sectors and growing food demands have become the major driving forces for water conservation in AZN, especially for those areas covered by GWDS. Development of an Integrated Water Resources Management (IWRM) approach has been placed as a priority in the government agenda with a combination of technology innovation, institutional development and system consideration. However, inherent complexities and uncertainties in natural, social and economic contexts are posing great challenges for decision makers to bring out a comprehensive water management strategy. Therefore, this research aims to develop a Market-Based Arid-Region Water Resources Planning (MAWRP) model for GWDS, with a focus on water trading under uncertainty. The MAWRP model encompassed a board perspective of technological, political and social factors to reflect the tradeoffs between food production and gains from water trading in the GWDS. This model is useful for exploring the full potential of water conservation through a combination of three approaches, including cropping pattern optimization, irrigation infrastructure improvement and water trading. The results show that the proposed method can help generate optimal cropping patterns, water trading rules, and improved irrigation infrastructure areas under various uncertainties. Moreover, decision makers can obtain useful information to formulate reasonable water allocation strategies and to design the most beneficial subsidization policies through the comparison of various policy scenarios with different water prices and opportunity cost of water.