Quasi-market Model For Water Right Management In The Field Of Chinese Interbasin Water Transfer

Interbasin water transfer is an important measure to solve the shortage of water resources and water crisis. Because of the uneven time and space distribution of water resources in natural state, many countries have built the interbasin water transfer projects to seek optimal allocation of water resources in a broader sense of time and space. According to the incomplete statistics, more than160large interbasin water transfer projects have been built, under construction or proposed throughout the various regions of the world, among which there are some famous interbasin water transfer projects. After the foundation of People’s Republic of China, interbasin water transfer projects have achieved a considerable growth, and some famous projects have been built or under construction, mainly including Water Diversion Project from Luan River to Tianjin, Water Diversion Project from Yellow River to Qingdao City, Water Diversion Project from Datong River to Qianchuan Basin, Water Diversion Project from Biliu River to Dalian City, Water Diversion Project from Yangtze River to the North Part of Jiangsu Province, Pi-Shi-Hang Irrigation District Project, Water Diversion Project from Dongjiang to Shenzhen and so on. The south-to-north water transfer project, being under construction is the largest water transfer engineering project which, till now, involves the most provinces and cities in China. What’s more, it is one of the giant water transfer projects in the world. The total amount of south-to-north water transfer project is approximately40billon cubic meters, and the largest water right transaction market in the world will be built along the water transfer line. Hu Angang, the famous scholar, said:"This is by far the largest water right transaction market in the world, and its operation marks the formation of Chinese water right market." Since reform and opening up, to solve the scarcity of water resources in many cities and regions, China has built more than20large interbasin water transfer projects. Interbasin water transfer has become a feature of water conservancy in the21st century in China. With the rising tide of interbasin water transfer projects in China, research on water right management model has become an objective and unavoidable issue.The paper concludes that the choice of quasi-market model for water right management in the field of interbasin water transfer in China means that in terms of water right administrative mode, the model of water right management is a continuous process, following the path of gradual economic reform. Quasi-market model has its theoretical basis, multiple—objective system, specific management style, and a clear institutional structure and operational mechanism, forming a complete theoretical system. Construction of quasi-market model, providing operable samples for water right management of interbasin water transfer in the whole country, is beneficial to its implementation more efficiently and more effectively. The keys of quasi-market model are active construction of water right market and promotion of comprehensive water conservation and scientific water-usage along the line of interbasin water transfer so as to achieve an optimal allocation of water resources, improve water usage efficiency, settle interest disputes along the line of water transfer, and maintain social harmony and development. The chapters of this paper are as follows:Chapter1, Introduction. This chapter defines the basic concepts involved in the paper, and makes the choice of quasi-market model from the prospective of water right management model and its classifications as well as theory and practice of water right management associated with interbasin water transfer situation at home and abroad. The paper suggests that scholars at home and abroad have not been specializing quasi-market model for water right management in the Field of Interbasin water transfer. Scholars from different perspectives set about studying the water right market building and the water right management of interbasin water transfer without taking each part and element as a whole. To suit the operational mechanism of water right, the water right management model of interbasin water transfer in China have been divided into four parts, i.e. administrative model(quasi-administrative model), market model and quasi-market model. Traditional administrative model of interbasin water transfer has shown the disadvantages, on the other hand, market model is just an ideal hypothesis. In this way, quasi-market model based on the theory and reality is a wise choice.Chapter2, The Theoretical Basis of Quasi-market Model of Water Right Management in the Field of Interbasin Water Transfer. The paper says that mixed economy theory reveals that government and market mechanisms are not perfect, but they are indispensable, both of which are integral to get the economy running. The introduction of market mechanism can effectively improve the efficiency of operation of interbasin water transfer project in China. Mixed economic theory provides the rationality of water right market introduced by the interbasin water transfer management. The development of public goods theory allows the joint supply of quasi-public goods by the government and market. In terms of quasi-public goods supply methods, the flexible forms makes diversified supply a necessity of the reform direction of quasi-public goods supply system, thus laying the theoretical basis of the diversified supply of interbasin water transfer management in China. The property right theory allows that the property right can flow between different subjects. Therefore, transaction of property right is a prerequisite and foundation for an efficient allocation of resources. A reasonable property right system enables the efficient allocation of scarce resources, eventually increases total social utility. Water right is an embodiment of the property right theory in the field of water resources. Fuzzy state of property right of interbasin water transfer management in China, lowering the efficiency of water transfer, makes it necessary to change. The property right theory points out the specific forms and roads for the introduction of market mechanism and the realization of diversified supply of interbasin water transfer management in China.Chapter3, The multiple-target of Quasi-market Model for Water Right Management in the Field of Chinese Interbasin Water Transfer. It is necessary to incorporate economic objectives, environmental and social objectives into a coherent target system of quasi-market model for water right management in the field of Chinese interbasin Water Transfer and to make clear the core element of the target system. The paper suggests that the economic goal is to achieve an optimal allocation of water resources through the establishment and development of water right market, among which the most important element is the construction of the subject and object of water right market and the establishment of operation mechanism of water right market. Environmental objectives refer that water transfer resources can meet the demands of people in daily life and production, at the same time have no negative impacts on carrying capacity of water resources and water environment, ensuring water environmental safety of interbasin water transfer, that is, safety of water quantity and water quality, safety of water environment and water strategy. The division of water right should include the ecological water right which should be implemented in water resource planning and water resource management. In the process of water right transaction, we should identify resource value and environment value of water, realizing the unity of quality and quantity of water right. Social goals seek to coordinate the complex interests along the line of interbasin water transfer. The best standard of resource allocation is to meet not only efficiency but also equity. The core element of equity is the foundation of ecological compensation mechanism. So, the big difference between traditional model and quasi-market model for water right managemen in the field of interbasin water transfer is the change from a single target to multiple targets. In the multiple—target system, the economy expectancy is a reasonable motive, but the establishment of water right transaction market and the increase of economic benefits of water transfer activities must not affect the protection of water resources, environment and ecology, and undermine the realization of social justice. Appropriate system of water right management provides new ways to achieve multiple—target by way of market.The fourth chapter, The Model Analysis of the Quasi-market model for water right management in the field of interbasin water transfer. By establishing "the bureaucratic level model for water right of interbasin water transfer", we can analyze the management system, institutional structure and operational mechanism of water right in the field of Chinese interbasin water transfer. With the research method of game theory, we can figure out the economic performance of the water right market. Based on the research findings of Cha Lin and Wang Yahua, in this paper, the writer establishes "the bureaucratic level model for water right of interbasin water transfer" which points out the distribution of the water right in the interbasin water transfer project and displays the nature of multi-level property right of water right. Water right is scattered in property right of different levels, including state-owned property right, district-owned property right, collective property right and private property right. Decision-making entities of different levels have different decision-making responsibilities and property right of each level is under the influence of upper levels of property right. The "bureaucracy of property right" consists of all the property right levels of water right and is embedded in the "system bureaucracy". Inside the management model for the water right of the interbasin water transfer, the increasing administration cost of the bureaucratic system or the decreasing cost of the market method has given rise to the impetus of introducing market mechanism. According to the macroscopic allocation of the superior administrative unit, waterhead companies, water supply companies, social organizations and private users obtain water right through ways of administration or market in line with their preferences. They are the holders of water right in different levels, who are all mobilized by the introduction of the market mechanism which also solves the problem of subject vacancy among asset owners and straightens out the property relations. As the base of resource allocation, the market mobilizes all the water right holders in different levels, thus the water price plays the role of leveraging, which impels the water resource to the most benefited place. Waterhead companies and water supply companies have full autonomy to make their own managerial decisions and take responsibilities for their profits and losses. They will reduce the cost of supplying water and improve the operation efficiency of water resources as far as possible in consideration of their own interests. The central government is trying to promote the democratic process in the management of water right, which highlights the user-orientation, combines the bottom-up demand for water right and the top-down water right allocation, at the same time adheres to the government’s macro-control. The government plays an important role in the initial allocation of water right, the cultivation of the market players for the water right, the formulation of water price and the protection of ecological environment. To seek an effective combination between centralization and decentralization is the essence of the quasi-market model for water right management of Chinese interbasin water transfer. A rational government will not rely on administrative means or let the market allocate the resource at its convenience. Instead, it will optimize the combination of the administrative allocation and the market mechanism to various degrees and in different ways with an overall consideration of national or local reality. The game analysis of the water right market demonstrates the performance of the quasi-market model. Therefore, in order to better coordinate the economic goals, environmental goals and social objectives during the interbasin water transfer process of our country, the system of water right must be transformed, specifically, from public system of water right to tradable water right system.The fifth chapter, The Structure of the Quasi-market Model for Water Right Management in the Field of Interbasin Water Transfer. At all levels of the system bureaucracy, the system follows the logic of minimal transaction cost, which offers explanation for diverse choices of system in real world. Through entrusting systems which are related to property right to different levels of decision-making entities, they will minimize the transaction cost of the management decisions for the transferred water resource. It is based on the system structure of property right bureaucracy of the quasi-market model that the paper presents the countermeasures of building the quasi-market model for the water right management in the field of Chinese interbasin water transfer. Namely, first, the reformation of initial water right allocation. In the constructing process of water right market for interbasin water transfer, the government will formulate a reasonable and effective distribution policy, by which, the water right will be allocated to water use areas along the line of water transfer in certain way. The democratic consultation of water right signifies a change of concept, from demand-decided to supply-decided, which will be conducive to the efficiency and harmony of water use areas along the water transfer line. Second, the establishment of the organizational system for water right market. In order to advance the development of the water right market, a wide range of market players must be cultivated. Waterhead companies, water’ supply companies and water consumer associations are able to make water right transactions in conformity with law provisions. Water bank will become the intermediary of water right transactions and also the major platform for the government to lead and promote water right transactions. Third, the clarity of the water pricing system. Water price is a lever to adjust the water right market, and different pricing systems have their own strengths in solving practical problems. The two-part water price has an advantage in response to the problems of interbasin water transfer, but other pricing methods should also be combined with in the implementation process, especially the full-cost pricing method, so as to achieve integrated and flexible use of water price. Fourth, the improvement of the ecological compensation system. The game analysis makes it clear that China should proceed to change the way of ecological compensation and make market compensation an important part of ecological compensation for interbasin water transfer. It should not only actively conduct lateral transfer payment from the exchequer and establish ecological compensation fund, but also try new compensation methods like water right ecological compensation. In this way, it can mobilize people to protect the resources and the environment so as to achieve the ultimate goal of coordinated economic development and ecological protection. Fifth, the improvement of legal system of water right. The healthy operation and development of water right market rely on unambiguous legal connotation of water right system, stipulated trading principles of water right and improvement of relevant legal system, which provide constrains and guarantee for the water right market. To build the quasi-market model, the government’s role of macro-control should be fully played while the construction of water right market should also be promoted. The government and the market play roles in their respective fields with effective coordination and cooperation.The sixth chapter, Case Analysis of Quasi-market Model for Water Right Management in the Field of Interbasin Water Transfer. Take the South-to-North water transfer project which is under construction and the Luan River to Tianjin which has been completed as examples, the dissertation makes a concrete analysis of the practice of the quasi-market model for water right management in the field of interbasin water transfer. With regard to the South-to-North water diversion project under construction, the government’s management hierarchically expands from the central to the local. The total number of funds in need is apportioned to the regions along during the initial water right allocation. The regions pay the water resources fee of their part during the constructing process and obtain the right to use the transferred water resource of the project. To promote the construction of water right trading market, the government should attach great importance to the intermediary role of the water bank and to explore the ecological compensation system compatible with the market when actively cultivating water right market players. As to the Luan River to Tianjin Engineering that has already been built, the initial water right allocation is still unpaid, which takes more traditional factors into consideration. When the market condition becomes mature, it can attempt investment apportion and other mechanisms. When the initial allocation of water right is completed, the government should deepen the structural reform of management, allowing water supply companies, group consumers, or large user associations to trade water right. Besides, it should make the best of the price lever so as to formulate an integrated water price, and regulate supply-demand relations in accordance with the law of market value as far as possible. It should also vigorously carry out water right ecological compensation and make market compensation an important part of the ecological compensation.The seventh chapter, Research Conclusions and Outlook. This part presents a summary of the research findings and specialties, points out the main innovations and research limitations, and also makes prospects for future research. The innovations of this dissertation include:formulating a theoretical framework of quasi-market model for the water right management in the field of Chinese interbasin water transfer, establishing the "bureaucratic model of water right system in the field of interbasin water transfer", demonstrating the performance of quasi-market model through game analysis, and clarifying the operation process of water right ecological compensation.