computable general equilibrium model

policy evaluation

socio-economy impact

water diversion project

water market of China

Policies for economically sustainable development

Policies for socially sustainable development

Policies for environmentally sustainable development

Finding a method to accurately evaluate a water diversion project’s socio-economic impact, which can contribute to planning and decision-making, has become a hot issue in the world. Our paper constructs a computable general equilibrium model of a water diversion project for a water-receiving area to solve this issue, and takes the south-to-north water diversion project in Beijing, China as an example. With comparative analysis of different water supplies, the socio-economic impact of a water diversion project on the water-received area is evaluated quantitatively. The result shows that as the reduction of the water supply from the south-to-north water division project under different policy scenarios, the regional gross domestic product decreases, which means the economic level declines, the proportion of high water consumption by industry declines, the price index rises (which is not conducive to social stability), employment rate falls and unemployment rises, and per capita disposable income falls (reflecting that the quality of people’s living standards is falling). This study provides a theoretical basis to allocate the diverted water and local water reasonably in order to adjust the industry structure according to the local situation, to improve water management, and to reform water market and water price.