Virtual water and its effect in Huaihe River basin: an analysis using a dynamic multi-region computable general equilibrium model

Abstract

A dynamic multi-region computable general equilibrium (CGE) model is used to analyze virtual water and its effect in the Huaihe River basin, which includes Jiangsu, Anhui, Shandong and Henan provinces. The baseline scenario was first constructed to describe the trade situation and virtual water among different regions and sectors from 2009–2020. Then two hypothetical policy scenarios were set to analyze the economic, water consumption and virtual water trade impacts under different policy shocks. The results show that (1) the Huaihe River basin was a net virtual water outflow region, with 13.977 × 109 m3 virtual water transferred outside the river basin in 2009, and 26.653 × 109 m3 VW transferred to outside in 2020. Jiangsu is the largest virtual water outflow province (mainly flows to outside), followed by Anhui. Anhui suffers from severe water shortage, but provides a net virtual water outflow to Henan, Jiangsu and Shandong and outside; (2) reducing Anhui's agricultural output (S1 scenario) and Anhui's agricultural virtual water outflow (S2 scenario) can not only reduce virtual water trade but also save water, but S1 scenario reduced net virtual water outflow by more, and saved more water. S1 had a positive effect on gross domestic product (GDP), but reduced the employment rate. HIGHLIGHTS Role of VWT analyzed using a CGE.; CGE based on 12 years of data (2009–2020).; VW study not only focused on agriculture, but also included industry and service sectors.; Two hypothetical scenarios were set to analyze the economic, water consumption and VWT impact.; Assessment of VW will change water usage and trade in different upstream and downstream regions of the Huaihe watershed.;

Keywords

• dynamic multi-region cge model
• huaihe river basin
• macroeconomic impact
• virtual water trade
• water consumption