Economic analysis of the value of water in alternative uses in the Lake Wuliangsuhai catchment, Inner Mongolia, China

Abstract

While Lake Wuliangsuhai is one of China’s largest freshwater lakes, its existence relies on the amount and quality of return flow from the Hetao irrigation area, in turn supplied from the Yellow River. The report estimates the economic value of lake uses including reed and typha harvesting, fishing, lake tourism business and recreation. Net returns to irrigated agriculture in Hetao irrigation area are estimated, including data on losses in irrigation transportation of water, and compared to published estimates of the returns to downstream uses of water in the Yellow River. Historical economic returns to multiple uses of Lake Wuliangsuhai are used to estimate average unit value of return flow from irrigation to the lake. Based on a simple model relating inflow – volume - lake level - area, several scenarios for impacts on total “reed area” and total “open water” area due to changes in inflow to LakeWuliangsuhai are constructed. Finally, the report estimates the marginal value of water supplied to Lake Wualiangsuhai to avoid a “worst case” scenario of permanent reduction in lake level.