The Gap between Expectations and Reality: Assessing the Water Rebound Effect in Chinese Agriculture

• Authors: Jaume Freire González.
• BSE Working Paper: 110886 | December 23
• Keywords: Rebound effect , technological progress , agricultural water use , sequential Malmquist index , logit model
• JEL codes: E23, Q16, Q25
• Rebound effect
• technological progress
• agricultural water use
• sequential Malmquist index
• logit model

Agriculture is a water-intensive industry; therefore, for policymakers trying to achieve a reduction in water use, the development of agricultural water-saving irrigation technologies to improve water utilization efficiency is of considerable interest. However, the real effect of technological progress on water savings falls short of expectations because of the existence of the rebound effect. This paper estimates the agricultural water rebound effect (AWRE) in China using a sequential Malmquist index and data of 31 provinces from 2002 to 2020. Furthermore, a Logit model is used to analyze the factors influencing the water rebound effect. The results suggest that the average AWRE ranges from -0.43 to 2.41 in Chinese provinces. Twenty-two provinces exhibit a partial rebound effect, while seven and two provinces exhibit a backfire and super conservation effect, respectively. Moreover, AWRE fluctuated around 0.5 from 2003 to 2013 and increased over time from 2015 to 2020. Additionally, water resource endowment has a negative effect on AWRE, while grain-crop ratio, the income of rural residents, and the irrigation infrastructure level have a positive effect on AWRE. Based on these results, policy implications are derived to mitigate AWRE in China.