Abstract:

Water acts as the life source, production element and ecological basis. China is now facing a serious challenge of water resource shortage. Being aware of the importance of this urgent issue, the central government proposed a blueprint on construction of watersaving society. It calls for a strategic transition from “broaden resources supply” toward “manage and reduce consumption”. Among all candidate measurements, the improvement of water efficiency is a fundamental and crucial channel to achieve this goal. To help understand better the concept, measures, determinants and related policy of water efficiency in China, this paper conducts a systematic summarization of the present theory and empirical progress on water efficiency studies from perspectives of both water supply efficiency and water utilization efficiency. We conclude that, the existing studies on the supply side investigate the linkage between water supply efficiency and economics of scale, firm ownership and regulation instrument. On the other hand, water utilization efficiency is found to associate with regional/industry disparity, water price, structural change, technology change. Our comprehensive survey also indicates some research gaps need to be filled in. First, an overall multidimension framework to accommodate various sectors and objectiveness is required. Under the frameworks guideline, the concept and related indicator of water efficiency can be clearly defined. Second, efficiency evaluation for Chinas water supply sector is relative scarce. More solid scientific evidences are needed to guide the policymaker more accurately. i.e. shall we encourage large or small water plant? shall we develop private or public plant? etc. Third, more detailed plantlevel analysis is needed to identify and explore the driving force of water use efficiency. It is noteworthy that, when the household consumption is taken into account, the efficiency criteria cant be applied alone as the water is life necessities. In this case, the water price and water demand are nonlinear relationship. Thus we should introduce the welfare function to derive the residential demand. Another similar note is the demand for different water quality is hard to measure quantitatively. A possible solution is to estimate approximately by the Contingent Valuation Method (CVM). Finally, policy assessment research needs to be emphasized. The water efficiency policy toolkit includes two components. One is to boost productivity in the water harvesting, producing, conveying, distribution and recycling process. Another aspect is to reduce users inefficient behavior through the price mechanism, water permit trade, quantity control and education