Keywords

Introduction

Water is essential for life and critical to food security, ecosystem service, and socioeconomic development. The overwhelming scarcity is challenging the earth’s sustainable development. Contemporarily, human needs for fresh water are still increasing in the process of industrialization, urbanization, and ecological conservation (Cosgrove and Rijsberman 2014; Deng and Zhao 2015). An estimated 80% of the world’s population faces a high level of water insecurity, particularly those in Asia and Africa (Bakker 2012). China faces a serious water crisis, as it has 20% of the world’s population with only 5–7% of global freshwater resources (Piao et al. 2010). A falling supply of water caused by climate change and a rising water demand from different users have posed great threats to the society, especially in arid and semiarid inland river basins.

Rivers and river basins are important components for acquiring and protecting water resources, and they provide good habitats for humans to live (Bakker 2012; Sivapalan et al. 2012). However, many inland river basins are facing challenges to coordinate environmental protection and economic development in the context of increasing water demand. The scarcity essentially represents the conflicts between thirsty farms and cities since the irrigated agriculture is predominant in most inland river basins. Agriculture is the main consumer of fresh water resources. At the same time, the rapidly developing industrial sector and an increasingly wealthy urban population have started to compete with agriculture for water (Deng et al. 2014b; Jiang et al. 2014). The overexploitation of groundwater is pervasive in most arid inland river basins since the diminishing surface water resources can no longer meet the agricultural water demand. The overexploitation of deep groundwater thus causes a number of environmental problems, such as land desertification and a reduction in the amount of natural vegetation cover (Qiu 2010; Deng and Zhao 2015). Furthermore, water use inefficiency and water waste are prevalent and have added to the water crisis.

Many have claimed that the global water crisis is one of governance much more than of resource availability (Grafton et al. 2013). Poor management of water resources is the main contributor to the irrational water allocation, overdrawing of renewable water resources, low water-use efficiency and agricultural water productivity. Water resource management is one of the key panaceas for coordinating social–economic development and eco-environmental construction in arid river basins. The appropriate management of water resources is essential for achieving sustainable development including social and economic development, poverty reduction and equity, and sustainable environmental services. Integrated river basin management strategies are urgently needed since traditional river basin management strategies cannot meet the needs of the dramatic socioeconomic development in the developing countries and regions.

Water supply management has long been considered as an important way to cope with increasing water scarcity. For instance, increase of water storage capacity and decrease of rainfall drainage for agricultural irrigation, together with prohibiting exploitation and occupancy of river beds, and devising innovative water policies at both administrative level and jurisdictional level (Gleick et al. 2011) are examples which draw researchers’ attention. However, water use for environmental adaptation is increasing sharply in arid and semiarid areas, which mainly comes from water engineering excluding natural water supply from precipitation and runoffs. For instance, in urban areas, water demands are for building public green, supplementing rivers and artificial lakes, while in rural areas, for supplementing swamps and low-lying lakes (Wang et al. 2015).

Modern civilization has made a remarkable progress in water management in the past few centuries, shifting from an engineering-based water management system to one that increasingly incorporates economic approaches. Public attention has been drawn on how to value water and how to economically use water (Tiwari and Dinar 2002; Schoengold et al. 2006; Venot and Molle 2008). Markets have been considered to be the most efficient way of allocating scarce resources by economic theory even though complete valuation of natural resource is impossible. It has been deemed that natural water resources, as externalities of the economic system, should be marketized with proper economic value. The physical water allocation on social welfare has spatial heterogeneity due to partial economic valuation issues. Partial valuation of water resource leads to Pareto inefficiency by market failure caused by asymmetric information. Thereafter, administrative policies always play uncertain roles to the practical results of welfare allocation mechanism.

In this chapter, we give a brief review of the water scarcity problem faced by the world and resource management strategies and innovations from a supply and demand management perspective. At last, by giving a comparison of the river basin management strategies of three typical river basins in the world, we present our findings and insights from research focused on the evolution of different approaches to an integrated and holistic water resource management and their implications for arid and semiarid areas.

Assessment of Water Scarcity

Water Stress and Its Drivers

Water availability has never been satisfied from a quantitative and quality perspective. Clean, safe, and adequate freshwater is vital to the survival of all living organisms. Though the earth is abundant with water resources, less than 2% of the total amount can be used or exploited by humankind. From the limited 2%, almost all of this (more than 98%) occurs as groundwater, while only less than 2% is available in the more visible form of streams and lakes (Bouwer 2000). When the annual renewable freshwater supplies are below 1700 m3/capita/year, water is definitely physically scarce. It is not surprising that some arid regions are already experiencing high “water stress,” especially densely populated arid areas like Central and West Asia, and North Africa, with projected availability of less than 1000 m3/capita/year (Rijsberman 2006).

Situation has become more worrisome in regard to water quality. The problem of water pollution is prevalent; many rivers, lakes, aquifers, and oceans are contaminated by point or nonpoint pollutions (Biswas and Tortajada 2001). According to the UN reports, about 16% of the world’s rural population do not use improved drinking water sources; 50% of people living in rural areas lack improved sanitation facilities (WWAP 2015). Eutrophication of surface water and coastal zones is expected to increase almost everywhere until 2030 (UNDESA 2012). More people are projected to die from water-related diseases during the period of 2002–2020, assuming the proportion of deaths to the total global population (Gleick and Heberger 2014). Poor water quality threatens human health and ecosystems, reduces the availability of safe water for drinking and other uses, and limits economic productivity and development opportunities.

Agriculture continues to be the biggest consumer of water resources and also one of the main reasons of pollution. Globally, 60–80% of water is used for irrigation, while the figure rises to nearly 90% in some low-rainfall areas (Gleick and Heberger 2014). It is projected that future population will increase, suggesting an increase in food demand and subsequently an increase in agricultural water demand if the current efficiency is not improved. Excessive use of fertilizers and pesticides has led to water pollution, particularly in the developing world. Similarly, water quality impairments can also have negative impacts on agricultural sector by causing salinity, the largest water quality problem facing the agricultural sector (Haddeland et al. 2014). And thus the dynamics leads to an increased competition among water users for the shrinking supplies of unpolluted water.

Climate change is expected to alter the hydrologic cycle and will subsequently impact water availability and demand. IPCC has projected that average global temperature will rise by between 1.1 °C and 6.4 °C over the next 100 years. There is a strong evidence that climate change is altering global and regional hydrologic cycles, with impacts predicted to be manifested as changing precipitation patterns, increased intensity of extreme weather events and consequent natural disasters, retreating glaciers resulting in altered river discharge regimes, and more intensified droughts in semiarid regions (Bates et al. 2008). Furthermore, the increase in global warming generally is expected to result in an increased evaporative demand. Many semiarid and arid areas (e.g., Mediterranean Basin, Western USA, southern Africa, northeast Brazil, southern and eastern Australia) are particularly exposed to the impacts of climate change on water resources through change in runoff, alterations in recharge of groundwater aquifers, shift in water table levels, and water quality problems and diminishing water resources.

Water Stress Indicator

Water stress indicators are important for policy-makers to devise appropriate management strategies. Condensed indices of water stress are very useful for focusing and simplifying the problem, more influential in affecting policy-makers’ decisions and are more effective at drawing public attention than the long lists of multiple factors or measures. As a result, the indices, rather than precise measures, have been considered as an important water management tool that holds considerable political appeal. Substantial efforts have been made by researchers to generate suitable expressions to represent water scarcity and stress, such as the Water Poverty Index (WPI) (Zhang et al. 2015). The interdisciplinary approach, Water Poverty Index (WPI), allows spatiotemporal patterns and trajectories of water scarcity and stress to be measured. The WPI was originally developed as a holistic tool to measure water stress at the household and community levels in the early 2000s which considers water availability from both the biogeophysical perspective and the socioeconomic perspective of people’s ability to access water (Sullivan 2001; Sullivan and Meigh 2007). It provides a basis for ranking administrative units in terms of water availability and the effectiveness of water management through combining a cluster of data that are both directly and indirectly relevant to water scarcity and stress into a single number. It assists both national and local decision-makers to better determine policy priorities for making interventions in the water sector.

Water Stress Assessment for Heihe River Basin

An Overview of the Study Area

Zhangye City, a prefecture-level city of Gansu province in Northwestern China, is located in the middle reach of the Heihe River and the hinterland of the Hexi Corridor, includes six counties or districts, namely, Ganzhou District, Linze County, Shandan County, Minyue County, Gaotai County, and Sunan Minority Autonomous County (Fig. 1). The annual precipitation in Zhangye City is only 198 mm as it is located within the arid continental climate zone. The average annual temperature is around 6°C, and the hottest and coldest months are July and January, respectively. Flat topography, fertile soil, and sufficient sunshine hours (up to 3000 h per year), together with primary irrigation by the Heihe River, have transformed Zhangye City into one of China’s 12 key national commercial grain bases. However, expanding agriculture and rapid economic development have resulted in the excessive use of water resources. In 2007, both the annual available water resources and the actual annual water utilizations for Zhangye City were 2.36 billion m3, of which 1.96 billion m3 were from surface water and the reminder was from groundwater. The majority (99%) of water usage is for socioeconomic purposes, and of this amount, 95% is used for agriculture. Ecological and environmental water demands have not been able to be accommodated in this socioeconomic-dominant system. As a result, the city faces an environmental–economic dilemma through increasing dependency on the scarce water resources and increasing environmental degradation (Cheng et al. 2014). Consequently, there is an imperative to alleviate water stress and promote water-use efficiency in this case study area.

Fig. 1
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Location of the study area: Zhangye City in the middle reaches of the HRB (Reprinted from (Zhang et al. 2015) with permission of Physics and Chemistry of the Earth, Parts A/B/C)

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General Workflow of WPI and Its Calculation

The WPI has been successfully applied to make both international comparisons and numerous case studies at the local level (Sullivan and Meigh 2007). Following the conceptual framework of the WPI, measures of water availability, access to water, the capacity for sustaining access, water use, the environmental factors that impact water quality, and the ecology that water sustains all need to be considered to provide a multidimensional picture of the water stress situation (Sullivan 2001). Here, we use the conventional composite index approach and matrix (quadrant) approach to generate the spatiotemporal pattern, typologies, and trajectories of water stress in the study area (Fig. 2). The primary step is to select suitable variables to represent each component (water stress indicators), following which we calculate the WPI and use different graphical devices to illustrate the spatiotemporal patterns, typologies, and trajectories of water stress for the study area.

Fig. 2
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General workflow of this study (Reprinted from Zhang et al. (2015) with permission of Physics and Chemistry of the Earth, Parts A/B/C)

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Water Stress Indicators

The indicators we used to represent the components of Resources, Access, Capacity, Use, and Environment in this case study are listed in Table 1 and the statistics of these variables for Zhangye City for 2005–2011 are presented in Table 2 “Resources” refers to the total available water and here we use the total amount of domestic, agricultural, and industrial water usage plus precipitation as a proxy. “Access” means not only acquiring safe water for daily needs, but also water for irrigating crops and for industrial use. In Zhangye City, most water consumption is for agricultural usage; therefore, we choose the agricultural gross ratio and the percentage of the population with access to safe water as the indicators for characterizing access. “Capacity” represents the power to purchase water and the ability to manage water supply. GDP per capita and tertiary industrial ratio are used to represent the level of economic development and are selected as the indicators of capacity. “Use” comprises domestic, agricultural, and nonagricultural water usage, and therefore indicates the total amount of domestic, agricultural, and industrial water usage in a county. “Environment” is represented by a summary of the annual average normalized differential vegetation index (NDVI), bare land area percentage, and annual ammonia nitrogen discharge, which are indicators that measure water quality and the ecology that water sustains.

Table 1 List of indicators used in the calculation of the WPI
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Table 2 Statistics of indicators used in calculating the water stress index
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Each indicator is standardized to a range of 0–100, and each component is the average of its indicators with equal weights. The WPI for a particular location is calculated as the average of five components, namely Resources (R), Access (A), Capacity (C), Use (U), and Environment (E), with equal weights. The values of the components and of the resulting WPI thus lie between 0 and 100. The lowest value (WPI = 0) represents a situation of the most severe water stress, and the highest value (WPI = 100) represents the best situation where there is the lowest risk of facing water scarcity and stress. The subcomponents are categorized into positive and negative indicators. For positive indicators, the higher the original value of a factor, the less severe the water stress and there is a better water management situation. For negative indicators, the lower the original value of a factor, the higher the level of water poverty.

Results

The longer the bars in Fig. 3, the higher the values of the WPI, and the less severe the water stress situation for a particular county. The highest value of the WPI is double the lowest value. The patterns shown in Fig. 3 demonstrate the distinct spatial variation in water scarcity and stress, even for small regions (such as parts of the water basin) at the local level, here with respect to counties.

Fig. 3
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Water stress index and its components for the six studied counties of Zhangye City (Reprinted from (Zhang et al. 2015) with permission of Physics and Chemistry of the Earth, Parts A/B/C)

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In the graphical device used for presenting the trajectories of water stress (Fig. 4), the origin and terminations of the x- and y-axes represent the minimum and maximum values of the mean values of Resources and Access and of Capacity and Use, respectively. The arrows show the temporal trajectory of each county through the dimensions from 2005 to 2011 (Fig. 4). A trajectory of points from the lower-left (low–low or LL) quadrant to the upper-right (high–high or HH) quadrant would indicate a substantial improvement in both water Availability–Access and Capacity–Use, and can be defined as progression. In this case study, only the curve for Shandan County is located in the HH quadrant, and the trend heads slightly upwards and to the right, indicating an improving water situation. The curves for Gaotai, Linze, and Sunan counties all trend downwards and to the right, which means an increase in Availability and Access but a decrease in Capacity and Use. Minyue’s curve trends downwards and slightly left in the HL quadrant, even though the original value of Availability and Access for this county is high. Ganzhou’s curve trends downwards and left in the LL quadrant, showing regression over time in both dimensions.

Fig. 4
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Trajectories of water stress for the six studied counties of Zhangye City (Reprinted from Zhang et al. (2015) with permission of Physics and Chemistry of the Earth, Parts A/B/C)

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The results indicate that water scarcity and stress have become more severe for most of the counties in Zhangye City over the period 2005–2011. There is clear spatial variation in water scarcity and stress between the different counties. Specifically, Shandan County scored relatively highly in the WPI and across multiple components, reflecting its progressive policies on access and management and its good water governance. In contrast, Ganzhou district, which contains the largest single percentage of the total population of Zhangye City, has faced increasing water scarcity and stress, and is regarded as having poor water governance. An analysis of water stress typologies using radar maps shows that each county had a distinct radar map pentagram shape, which indicates that each county faced its own particular challenges and opportunities in the context of water scarcity and stress. In addition, the trajectories map reveals that none of the counties has substantially improved both water access and management, a finding that should attract the attention of decision-makers. In short, the WPI, serving as a simple, transparent, and holistic tool, provides a better understanding of the complexities of water scarcity and stress by integrating physical, socioeconomic, and environmental factors. This is particularly the case when changes in the index can be assessed over a reasonable period of time and when the trajectories of the index and its components can be tracked and its typologies identified. The WPI appeals to decision-makers and should also serve to empower the public to participate in practicing effective and efficient water management through determining and justifying policy priorities.

Water Supply Management

Water Conservancy Projects: Reservoirs and Dams

Water demand for urban consumption, industry, and irrigated agriculture continues to increase under climate change. Water supply is limited and frequently faces hydrological uncertainties like erratic rainfall, natural hazards: floods and droughts. To protect water supplies against these extremes and changes, more storage of water is needed, especially in arid and semiarid areas. Water reserves and control projects are constructed during times of water surplus to use its water in times of water shortage.

Traditionally, such storage has been achieved with dams and surface reservoirs. From the 1930s to the 1980s, numerous dams were built all over the world for hydropower generation, flood control, or multipurpose water development (Haddeland et al. 2014). These projects have played important roles in providing assured water supply for domestic, agricultural, and industrial purposes and reducing flood and drought damages. Studies have shown that water investments reduce damages from extreme weather events from 25% to 30% of GDP to around 5%, making these investments a crucial element in achieving social stability (Biswas and Tortajada 2001).

Though people really have gained lot of benefits through construction of dams and reservoirs, disputes also arouse for the disadvantages and the adverse effects they may cause. Dams have a number of disadvantages like interfering with the stream ecology, adverse environmental effects, and evaporative losses (especially undesirable for long-term storage). Construction of dams is costly, and leads to displacement of people and loss of scenic aspects and recreational uses of the river. Dams prevent nutrient and water flowing to the downstream that is needed to maintain and nourish the rivers and deltas, a crucial source for agriculture production and fish. Other public health problems are also concerned such as increased waterborne diseases. Furthermore, though hydropower dams can boost development, they block most of the sediment, eventually losing their capacity as they fill up with sediments. In the USA, several dams have already been breached, and more are scheduled for destruction, mostly for ecological and environmental reasons.

Water Transfer

When demand for water outstrips the amounts that are generated within the river basin, supply-oriented approaches will remain important and new water sources will have to be found either by desalinizing sea water in coastal regions or by taking water from neighboring river basins, that is, through interbasin water transfers (IBTs), which usually helpful in arid areas. IBTs are designed to secure access by artificially conveying water to locations where people need which is increasingly becoming the dominant solution to water insufficient areas. Inter basin water transfers currently divert about 540 * 109 m3 of water, which represent approximately 14% of all global water withdrawals (Howe and Easter 2013). And at the same time many small interbasin water transfers are gradually increasing in order to solve water shortage.

The South–North water transfer in China is a famous water transfer project that has been conducted to alleviate the water scarcity in Northern part of the country. The project not only provides water resource guarantee for Western China’s social economic development, but also increase the runoff of the rivers and improve the water environment in that region at the same time. The transfer project benefited the eco-environment in water-received area by helping to stop and control soil and water loss and land desertification, decrease natural disasters, improve the agricultural eco-environment and local survival for the inhabitant, restore the ecosystem, and enhance environmental capacity and load-bearing capabilities.

Though the concept of transferring water from one river basin to another has evolved over centuries as a useful means of meeting water demands, it generates some of the largest controversies and deepest conflicts over water resource development (Howe and Easter 2013). Supporters claimed that water transfer plays a crucial role for rational allocation and avoiding overexploitation of natural resources. Furthermore, water transfer projects not only brought opportunities for ecological and economical use of water resources, but also contributed towards regional industrial and societal development (Gupta and van der Zaag 2008). However, opponents argue that despite their high cost and “high profile” in terms of the complex engineering and technical inputs that they require, the ecological and social implications of such schemes have been, and continue to be, questioned. They claims that such projects have the potential for serious ecological impacts, including introduction of nonindigenous organisms, changes in water quality and hydrologic regimes, and alteration of habitat which results in severe ecosystem perturbation (Tang et al. 2014).

Whereas, empirical knowledge of ecological consequences of interbasin water transfers is still limited and research for assessment of water transfer impacts to date are inadequate. It is imperative to develop coordinated research methodologies to be incorporated into the planning and evaluation of interbasin water transfer projects.

Impact Analysis of Investments on Water Projects

Government investment on large water conservancy project has huge impacts on local economic development and ecosystem. For instance, large water transfer projects like the Three Gorges Hydraulic Power Station in China cost 5.19 billion in USD and led to migration of 1.13 million people, and the Hoover Dam in the USA made great economic contribution of power generation for 8 million people in Arizona, Nevada, and California. Furthermore, partial valuation of natural land use results in heterogeneously proportional changes between land price and the prices of other normal commodities that are caused by hysteretic price on continual utilization without market transfer. Therefore, modeling water allocation needs to consider more complex structure of the factor inputs from the demand side. It will provide economic insights for policy analysis of the efficiency of government investment on large water projects. It also provides a macro-view economic valuation of natural water resource through entire engineered economic system that can be also assessed by social welfare implication of relative changes through micro economic approach.

Methodologies and Conceptual Model

Computable General Equilibrium (CGE) modeling from both water supply side and demand side provides insights of policy-oriented impact of water resource allocation. It is a systematic equilibrium-based research on water allocation from both water supply side and water demand side, which indicates sustainable adaptation of a regional integrated water system for both ecological and economic development under water scarcity condition (Rosegrant et al. 2000).

Improved CGE Model was designed by introducing natural capital, water, and land into the modeling framework. Water and land have been partially valued and plugged into Social Accounting Matrix (SAM) to indicate relative demands. Water use for urbanization and environmental adaptation as a part of water demand is mainly provided by water engineering and financed by Central Government and Provincial Government. It is outside of systematic balancing but have a huge impact on economic structure and sustainable development in dry rural area. Study on total regional water demand has to consider a general equilibrium as an analysis tool to systematically explore interrelationships and interactions at a regional extent. Thereby, based on unit price assumption in CGE Model, economic valuation of water use provides leverage through marketized mechanism to analyze interaction and interrelationships between water consumption and economic activities with governmental financing. Systematic analysis in laboratorial experiments is provided by GAMS (The General Algebraic Modeling System) to test relatively proportional changes in the modeling system under different scenarios.

The conceptual model designed three-nested Constant Elasticity of Substitution (CES) production function in the regional CGE model. It means that the nonlinear relationship among factors is designed instead of traditional linear relationships of CES production function. Intuitively, evolutionary civilization is nonlinear process. It covers endogenous nonlinear technology improvement, nonlinear resource utilization, and nonlinear human activities. Thereafter, researchers have to recognize economic scales that are based on different levels of productivity.

Land and capital are designed in the first level of economic scale in the modeling framework. Theoretically, land is an irreplaceable resource on the earth. Since humans hunted for food in “pristine” environment during ancient times, we have started to learn from the natural environment. After humans learned how to use stone to make fire, our agricultural activities started to rely on how to use land. According to different land utilizations, capital has been accumulated through the “learning-by-doing” process to support human sustainable living. With advanced technology, humans have constantly created and improved adaptive environment, and built numerous skyscrapers for efficient land use, but the total available land is still limited.

Labor as a production factor is designed in the second level of economic scale in this modeling framework. From ancient times to modern times, labor-intensive jobs are gradually substituted by advanced machines. Although endogenous capital growth is attributed to technology improvement, labor contributes to both aspects of capital accumulation and research development. Thus, the substitution of additional labor input is designed at the second level productivity. Human activities brought industrialization and civilization. Our living standard and environment have been improved, however polluting the natural environment.

Particularly, in recent two hundred years, human-dominated ecosystem (HDE) has been pressured by rapid growth of urbanization expansion. In the past several decades, “urban fringe” has been paid much attention because ecosystem along urban area is bearing much pressure of increasing human activities (Muller and Lenz 2006). Moreover, with increasing individuals and public utility level, government policies can now easily distorting ecosystem and economic system. Globally water demand for environmental adaptation and conservation are sharply increasing with downhill climate changes.

Case Study and Implications

Gansu Province, where Heihe river flows through, including 14 prefectures, is located at northwest of China. It has a population of 26 million in 2008, with a total area of 425,800 km2. It is mostly covered by semiarid to arid land, alternatively influenced by subtropical monsoon climate and temperate continental climate. Water scarcity still remains severe due to the constraints of regional characteristics of the unique geographical location. The annual available water was less than 1100 m3 per capita, which is only a half of the national average or one-eighth of the world’s average. Furthermore, Gansu has been undergoing a rapid transformation of industrialization with flourishing in Tertiary Industry from the 1980s. The urbanization rate was about 38.75% in Gansu Province until the end of 2012, which was lower than the national average at 52.57%, ranking the fourth lowest in the country. Increasing water demand for both environmental adaptation and urbanization gradually draw public attention (Wang et al. 2015). Provincial government had invested and subsidized over 0.51 billion USD on large water projects from 2002 to 2008 for supplementing water supply and enhancing water facilities.

Therefore, under the background of urbanization and drought area expansion in Gansu Province, many questions have not been answered yet. For instance: What percentage of changes in the economic production is driven by the changes in water scarcity? How the economic impact of water scarcity and urbanization changes the economic structure? How much rural and urban welfare will be reallocated? While government investment influenced this process, by how much did the economic outputs were changed as result of large water projects? This case study focused on both sides of water supply and water demand through the CGE modeling framework introduced above. Systematic analysis in laboratorial experiments is provided by GAMS to test relatively proportional changes in the modeling system under different scenarios. This chapter gives some insightful conclusions and implications. For further information please refer to Wang et al. 2015.

Water use for urbanization and environmental adaptation as a part of water demand is mainly provided by water engineering and financed by Central Government and Provincial Government. It is outside of systematic balancing but has a huge impact on economic structure and sustainable development in dry rural area. Government investment on large water projects will enhance economic efficiency but depreciate present value of social welfare in order to benefit future generation in the study area. Huge governmental financing on water projects brings present value of social welfare depreciated. Water use for municipal environmental adaptation will continuously pressurize water supply side. Water unit price can be sharply increased by water scarcity and increasing cost of factor inputs. Furthermore, increasing governmental financing on water production projects depreciates present value of social welfare but benefits future generation by enhancing economic efficiency of water use.

Study on total regional water demand has to consider a general equilibrium as an analysis tool to systematically explore interrelationships and interactions at a regional extent. Thereby, based on unit price assumption in CGE Model, economic valuation of water use provides the leverage through market mechanism to analyze interaction and interrelationships between water consumption and economic activities with governmental financing. Meanwhile, one of the key issues is to release some limitation of land properties in China. However, since the nonzero transaction cost of land mobility breaks through the assumption of perfectly competitive market mechanism with zero transaction cost, increasing governmental financing on water production projects have expanded water-saving area from 2002 to 2008 in drought regions of Gansu Province. That can be considered as a compromised policy-oriented implementation of land use with water use.

Water Markets

Undoubtedly, with rapid development of industrialization and urbanization, water demand will increase in the future, and the gap between water supply and demand will be fiercer in arid and semiarid regions such as Northwest China (Cheng et al. 2014). There is an imperative need to investigate the management of water demand and the market mechanism for water allocation so that the current mode of extensive agricultural water use can be transformed. Price control and quota control are the two main water demand management strategies. The extensive quota management usually fails to reduce the water demand for the poor administrative management and less-stringent quota regulations. On the other hand, price control which is based on market mechanism has been given a high priority hoping that the reasonable price signals can regulate the extravagant water consumption and promote water conservation and the rational allocation of water resources (Huang et al. 2010).

Water Right

Water right, a prerequisite for water markets, is considered as a key water management instrument to improve water use efficiency. The way water property rights are defined may influences the decisions regarding water ownership, use and transfer, and the well-defined water rights can lead to effective allocation of scarce water among irrigators, industries and households (Hanjra and Qureshi 2010). Countries define water rights in various ways from their historical backgrounds. The systems of riparian rights and prior appropriative rights were developed in England and the Western USA. Public allocation systems, in which water is defined as public property with the state as the owner of water, and where the water rights are administratively allocated to users through water permits from governments, has been applied as an alternative.

Since water markets do not determine the initial allocation of rights, and it can come into play only when the water rights or use rights have been established. The main concerns about water rights includes: how to define and establish an efficient water rights system and the mechanism to evaluate the performance of current water rights system; the way how water rights are traded and the efficiency valuation (Grafton et al. 2013), all are needed to be considered in a water rights system. Furthermore, how to use the water rights system to improve water use efficiency, especially irrigation efficiency from interactions between different water rights and other attributes is also a hot debate.

Water Price

Water pricing has been considered as the most effective way to advance water reallocation and water conservation (Tiwari and Dinar 2002). As an important socioeconomic tool, it could reveal economic and scarcity values of water resource and encourages water users to utilize the resource more wisely. For agriculture, appropriate irrigation water pricing could guide farmers to adopt irrigation technologies with high irrigation efficiency or to change to a more productive cropping pattern (Schoengold et al. 2006).

Underpricing of irrigation water is frequently identified as the primary cause of excessive use of water for irrigation. Researchers and policy-makers reckon that undervalue of water in agriculture may lead to a chronic overuse of it. Although agricultural water demand is high, the irrigation water price is relatively low, much less than its production cost. Price leverage cannot play a significant role in the context of the current pricing regime and farmers’ response to price increase is intrinsically weak.

The price elasticity of the derived demand for irrigation water is an economic measure that is often used to evaluate the effectiveness of price incentives in facilitating water conservation. Previous studies on water price elasticity and its influence on water utility revealed that the demand for irrigation water is inelastic because the price is too low (Schoengold et al. 2006). But simulation analysis has shown that when the price of water is raised to a relatively high level, the pricing can promote water savings (Huang et al. 2010). On the other hand, some scholars still doubt about water pricing effects on water saving that could lead to some socioeconomic and other external effects such as agricultural production reduction, rural poverty and overutilization of groundwater resources brought by increasing water price (Venot and Molle 2008).

To date, most of the existing studies on agricultural water use and irrigation water prices have considered the qualitative aspect only, while quantitative relationship between water demand and price has been neglected or underexamined. In order to assess the effectiveness of the pricing mechanism as a policy tool in dealing with water stress in irrigated agriculture, two key research questions need to be discussed: Is water pricing really an effective instrument in controlling water demand under current circumstance? Does increasing water price significantly promote water conservation? And if so, how will this influence farmers’ decisions and crop production? To answer the above questions, studies of price responsiveness in irrigation water demand based on the water demand function have been used to figure out the relationship and influencing mechanisms between irrigation water price and water demand (Zhou et al. 2015). Also, impact of increasing water price on farmers’ income, crop structure and groundwater extraction have been discussed in the following section. In the next section, we discuss about water price reforms in the Middle Reaches of Heihe River basin. This area was chosen for its severe water stress situation and substantial role of grain production in China. Consequently, based on our research findings, the appropriate policy recommendations, aiming for adaptive water management, were developed.

Irrigation Water Price Reform in HRB

Zhangye City, which is located in the middle reaches of the Heihe River, is a prefecture-level city of Gansu Province in Northwest China, and the hinterland of the Hexi Corridor. Expanding agriculture and rapid economic development result in the excessive use of water resources. The majority (99%) of water usage is for socioeconomic purposes, and of this amount, 95% is used for agriculture. Ecological and environmental water demands have not been able to be accommodated in this socioeconomic dominant system.

Low water prices have been widely disparaged for the low efficiency in irrigation systems. Farmers have little incentive to conserve water or to adopt new water-saving irrigation technologies. Agricultural water price is very low in Zhangye. Because of the low prices, farmers have no incentive to change their inefficient irrigation modes and to adopt new irrigation skills or to purchase more expensive but efficient equipment. Since price elasticity of irrigation water demand changes at different levels of water prices, the price increase will lead to the increase of the elasticity, and thus a more responsive feedback occurs between farmers and the irrigation water markets. From the year of 2015, in order to control irrigation water demand, irrigation water price reform has been launched in Gaotai and Minle as pilots. The surface water price was increased from 0.1 to 0.2 Yuan/m3, and groundwater tariff was increased by 10 times from 0.01 to 0.1 Yuan/m3 (Zhou et al. 2015). The sharp increase in water price may have some impacts on cutting the extravagant water demand and leading farmers to choose less water intensive crops and/or higher water productivity plants, namely, the plants with higher economic return per cubic meter water. Also, the price reform will have some impacts on water saving, cropping pattern and groundwater extraction.

Influence on Water Saving

The current irrigation water price is very low in Zhangye, which can hardly cover its cost. The average surface water price for agriculture was only 0.071 Yuan/m3 before 2011, which was increased to 0.1 Yuan/m3 in 2015. However, surface water is still not able to cover its cost at a price of 0.15 Yuan/m3. The current groundwater price is very low, that is, only 0.05 Yuan/m3. Furthermore, the irrigation cost is only a small portion of total crop farming cost, that is, less than 10% of the total input of crop production. The local government has issued a standard for levying agriculture irrigation water tariff. The water tariff consists of two parts, the basic tariff and the metering tariff. Charges for canal, pipeline, and drip irrigation use a unified price. For groundwater, the cost of irrigation is primarily the expense of power and pumping equipment. Water resource itself is almost free. No restriction is imposed on the volume of water extraction in each well, though digging new wells in principle requires the approval of water authorities. Farmers measure their irrigation cost by electricity and fuel bills and the concept of water cost is generally absent. In this context, the number of wells has been thus continually increasing in recent years. Based on the average amount of irrigation water per hectare, the water demand shows a slight decrease trend when facing an increasing water price. It indicates that increasing water price helps to promote water saving and induce a transform of the traditional irrigation mode.

Generally, different water rates may develop significantly varying water utilization behaviors considering the cost for implementing water conservation technologies. When the price is far below the cost adoption of new technology, the traditional irrigation mode will not be altered and water saving will merely come from reduction of irrigation water. But when price is increased to the level where its cost is higher than the cost of new technology adoption, new irrigation technology will be promoted and the extravagant irrigation mode will be given up.

Considering the current low water price elasticity of irrigation water demand in Zhangye, implementation of the price instrument may not be too effective in the present situation. Another problem needs to be considered is that when water price is higher than groundwater extraction cost, farmers will have the motivation to dig more wells and use more groundwater for irrigation. Currently, well management is not strict and overextraction of groundwater is a common practice in Zhangye and in many other China’s cities. Though the sole increases of water price may not be very effective at current stage, price leverage together with other measures, such as quota system, can still be a potential instrument for alleviating the increasing water demand.

Influence on Cropping Pattern

Since the 1950s, Zhangye City has been a commercial grain production base established by the Central Government of China. It has a double cropping system with wheat growing in winter and maize in summer. Before year 2000, more than 70% of sown area in Zhangye was wheat and maize. In recent years, changes in agricultural policy in China have allowed farmers to choose their crops and thus more cash crops (such as alfalfa and vegetables) were planted in order to increase farmers’ income. In 2008, the sown area of vegetables increased by nearly 20%. However, grain farming still remained dominant in Zhangye City. Water-intensive crops such as maize and wheat are still grown as main crops. Among these crops, maize is the most water intensive one. The average water requirements during the growing period for wheat and maize are 602 mm and 500 mm, respectively. Although water resource is limited, farmers still cultivate maize over large areas, and thus consume more water as compared to other crops. Recently, with the intensification of water scarcity, shifting to higher added value crops has been strongly encouraged.

The rationale behind this is that the shift could generate higher output value with a given amount of water, indicating higher crop water productivity as a result of shift. Increase of water price will also affect planting structure preference of farmers’ crops in the long run. Additionally, cropping structure is more likely to be influenced by government policies and market situation. Therefore, in order to save water and increase water productivity, high water consumption for low value added crops needs to be substituted by the production of high value added crops; however, minimum grain production demand needs to be satisfied at first.

Influence on Groundwater Extraction

With limited surface water resources, increasing water price and water demand, groundwater extraction is a feasible substitution. Groundwater for irrigation has been increased by more than 70% since year 2000, and the number of wells has been increased by 25% in Zhangye.

In Zhangye, each pump is operated independently and serves only a small group of farmers. The irrigation management is taken primarily by village collectives or by individual farmers who acquired well leases from collectives. The licensing system for new wells is not effective. Digging new wells is subjected only to the financial constraint and resource availability. Furthermore, as water is a free resource, the only costs are electric power and the expenses for digging wells.

Increasing surface irrigation water price may lead to a further overexploitation of groundwater considering the low price of groundwater, the unrestricted extraction of groundwater on existing wells, and no effective control on digging new wells. For this, it is imperative and urgent to implement strict groundwater management and levy groundwater resources.

Imposing a groundwater resource levy may not completely alleviate water scarcity. For this reason, introducing the groundwater resource levy must be taken in parallel with a restriction on the total volume of water-withdrawal, an improvement in water saving irrigation technologies, and promotion of industrial transformation.

Farmers’ Response to Increased Water Price

The perverse impacts of water price increases on agricultural output and farm income are partly because the current water price is far below the shadow price of water resources, which is estimated as the marginal product value based on the production function theory. When price is far below the shadow price, farmers have little incentive to invest in the application of water-saving irrigation technologies or to reduce their sown area. When price is in the efficient price range where the price elasticity of water demand is high, pricing leverage would be an effective instrument. It would provide the necessary incentives for farmers to adapt to the rising prices by using irrigation water more efficiently, and giving up extravagant irrigation methods, such as flood and furrow irrigation, and adopting more efficient water-saving irrigation modes, such as spray irrigation and drip irrigation.

Although an increase in water price could lead to a decrease in agricultural water use, it does not necessarily mean that a water price increase would be a good measure. From experiences of other countries, farmers’ water use decisions are significantly unresponsive to changes in the price of water when the elasticity is low. Large price increases would cause relatively small reductions in irrigation water use, but high negative effects on agricultural income and wealth. Moreover, if the water cost accounts for more than 20% of farmers’ income, a price hike would hurt farmers’ enthusiasm for production, particularly grain crops will most likely to decline when facing increasing irrigation water cost. This could have a series of implications on regional economy and trade. Food imports, especially import of cereal grains would increase. Thus, there is a trade-off between water consumption reduction and the regional agriculture and economic development based on the price responsiveness.

Furthermore, apart from the increasing production cost, the responsiveness of farmers’ water use to different prices is influenced by many other factors. For instance, water management systems, market conditions, availability of substitute crops, farmers’ freedom of decision-making for agricultural production, and the overall status of rural and urban economic development. All these factors need to be considered when implementing the price mechanism.

To create incentives for conserving water and improving irrigation efficiency, price mechanism should be accompanied with clearly defined and legally enforceable water rights, restricted water quota measures, and reform of water authorities and water–user associations. Furthermore, increases of surface irrigation water price may lead to the overwithdrawal of groundwater, and therefore, effective groundwater licensing and levying must take place to limit the total volume of groundwater withdrawal. In nutshell, improving irrigation efficiency through better management and the adoption of water-saving technologies is the ultimate way to deal with the challenges faced by irrigated agriculture in the middle reaches of the HRB.

River Basin Management Comparisons

Rivers and river basins are important components for acquiring and protecting water resources, which play an important role in ensuring the sustainable water supply for ecosystem services and human well-beings. The inland rivers in Northwest China are good cases with the context of extensive economic development and contemporary transformation and policy reforms. The North and Northwest China account for half of the total area of the nation, but only have less than 20% of the total available water resources (Bakker 2012). Meantime, considerable progress in integrated river basin management strategies has been made in both theory and practice in some developed countries. Studying the river basin management in the developed countries and making comparisons between their river basin management strategies can provide useful guideline for the river basin management in developing regions such as the Northwest China. However, until now, very few studies have paid attention to the river basin similarities and made comparison analysis between specific river basins in different countries. Some of the previous research works by Chinese scholars summarized the lessons learned from the Murray–Darling Basin (MDB) by introducing the river basin management approaches and the Integrated Catchment Management Strategy. However, one gap is that they did not provide specific guidelines about how these approaches can be used in China’s river basins. Also, these research works did not incorporate the most recent initiatives of the river basin management. In the recent research works, the management modes of the MDB in Australia have been analyzed in terms of the basin scale management, three-layer organizational coordination system, marketization as well as the agreement between states. However, they did not provide specific cases in China.

What are the similarities and differences of the typical river basins in terms of the physical conditions, water problems, as well as the river basin management strategies? To what extent can these water management strategies be used as guidelines for integrated river basin management in rapid developing countries with arid or semiarid climate conditions? This chapter answers these questions by comparing the river basin management strategies of three important river basins: the Heihe River Basin (HRB) in Northwest China, the MDB in Australia and the Colorado River Basin (CRB) in the USA which show comparable characters and similarities in the hydrological contexts and river basin activities.

Hydrology Context of the Three Basins

The HRB is one of the typical inland river basins in Northwest China. Geographically, it has three reaches with hydrological variation. The upper reaches in Qilian Mountain belong to the northern margin of the Tibet Plateau. It is the headwater of Heihe River as well as the runoff area, with abundant rainfall and less evaporation. Being the oasis of the Hexi Corridor and the desert plain, the middle reaches are the key areas for agriculture and it is the grain base for Gansu Province (Wang et al. 2015). The lower reaches in north of the Langxinshan Gorge form the oasis in Inner Mongolia, making it an essential ecosystem barrier of North China (Deng and Zhao 2015).

The MDB is one of the largest and one of the driest river systems in the world. It contains Australia’s three longest rivers: the Darling River (2740 km), the Murray River (2530 km), and the Murrumbidgee River (1690 km) (Banks and Docker 2014). Geographically, the MDB is divided into the northern basin and the southern basin. The southern MDB, which includes the Murray and Murrumbidgee Rivers, is where the majority of water resources are found, and it is also where the around 90% of the water extraction come from. The region is fed by winter rains and snowmelt from the high country along the Western slopes of the Great Dividing Range. The northern MDB receives most inflows from tropical summer rains in Queensland and northern New South Wales. The rivers flow from inland to the west, crossing expansive semiarid plains. The Darling River enters the Murray at Wentworth, which flows into South Australia before turning south towards the Southern Ocean. The basin diverse environments and nationally significant and iconic tourist destinations are ideal for a wide range of recreational activities.

The Colorado River is one of the critical rivers of the Southwestern USA. Rising in the central snowcapped mountains in the north central Colorado, the river flows generally from southwest across the Colorado Plateau and through the Grand Canyon before reaching Lake Mead on the Arizona–Nevada border, where it turns south towards the international border. After entering Mexico, the Colorado approaches the large Colorado River Delta at the tip of the Gulf of California, between Baja California and Sonora. The river and its tributaries (the Green, the Gunnison, the San Juan, the Virgin, the Little Colorado, and the Gila Rivers) are called the CRB, which constitutes one-twelfth of the USA’s continental land area. Ninety-seven percent of the CRB watershed is in the USA. Seven Western states in the USA and part of the Mexico get beneficial interests from the CRB.

Drought and Irrigation

The water availability varies across the MDB, CRB, and HRB; the annual precipitation of the HRB is much less than the MDB and the CRB. For the MDB, the dry conditions from the mid-1990s to early 2010 were dubbed as the “Millennium Drought” (van Dijk et al. 2013). This drought was mainly confined to the southern MDB and was dominated by autumn and early winter rainfall deficits in terms of the numbers of rain days and the intensity of daily rainfall events. Just as the Northwest China, Australia is one of the world’s most arid countries, and around 70% of the land receives less than 500 mm rainfall per year. Similar with the MDB and the HRB, since the late 1990s the CRB has been affected by severe drought. The water storage in the basin’s reservoirs dropped sharply during this period. Colorado, New Mexico, Utah, and Wyoming in the upper basin have been on the dry record, with the driest years in 2002 and 2004. Additionally, the drought from 2000 to 2007 has reduced total water storage in the CRB reservoirs from nearly full to 55% of capacity. Since precipitation and temperature patterns are important controlling factors for the droughts, this evidence strongly suggests that the extended droughts are likely to occur and the long-term water availability should be of concern. The issues on increasing aridity, more intense and frequent droughts of CRB also have been mentioned in other research works.

Irrigation practice has been the closest and probably the most widespread association of human activity with the hydrological process of the river basin system. It can be clearly noticed that the irrigated agriculture is predominant in our cases of the HRB and the MDB. Actually, dating back to the sixth millennium BC along the Nile River in Egypt, people manipulated water to sustain settled agriculture in Mesopotamia and then Egypt. Contemporarily and globally, the situation is even clearer with the fact that irrigation accounts for 70% of global water withdrawals, although these figures vary considerably across countries. Furthermore, from 1960 to 2000 the world’s population more than doubled, but the cultivated land only increased by 13%. It is easy to move from this fact to assume that irrigation plays an important role in world agriculture (Haddeland et al. 2014).

For the HRB, large-scale development of irrigated farming induces dramatic increase of water demand for the last decades. The irrigation encompasses 205, 230 hectares, accounting for 91% of the area of cultivated land in the whole basin (Deng and Zhao 2015). Similarly, although Australia has a relatively small population (approximately 19 million), irrigated agriculture with water from rivers is predominant. More than 2 million people live in the MDB and more than 1.3 million people living outside the basin also depend on its water resources. During 2001–2006, the basin’s population grew by 3%, lower than the national population growth of 6%, which was affected by the impact of the ongoing millennium drought (1995–2009). For the water activities, the Murrumbidgee River was the first one developed for irrigation, and is also one of the most developed rivers in Australia. The irrigated area has been increased by 26% from around 1983 to around 1996, and the amount of water increased by 76% during this period. In terms of the CRB, the Colorado River is a vital source of water for agricultural and urban areas in the Southwestern USA. It not only provides water to irrigate 15% of US crops, but also supports billions of dollars of economic activity. About 90% of the pastureland and harvested cropland in the CRB is irrigated. More than 1600 species of plants grow in the CRB.

Rapid Industrialization and Urbanization

From a global perspective, aside from the agricultural sector, the industrial and domestic sectors account for the remaining 20% and 10% of the water consumption. Nevertheless, a growing body of evidence suggests that the impact of urbanization on river systems is more severe than other land uses such as agriculture and forestry land. Urbanization can result in major changes in stream hydrology, geomorphology, water quality, and stream communities. Degradation of stream ecosystems also occurs at low levels of urban land cover. In arid and semiarid areas, the existing water resources are already at a carrying capacity level, and correspondingly there is a considerable water demand in the process of rapid urbanization and economic growth (Deng et al. 2014a). A large-scale, long-term, repeated cross-sectional study of domestic water use problems has been done in East Africa by concentrating on changes in domestic water use over three decades in nine towns and cities in Kenya, Tanzania, and Uganda, which reflect the diversity of urban environments, and living conditions.

Specifically, the Hexi Corridor, an arid area in Northwest China where the HRB is located, is a good example in this case. The water for urbanization comes at the expense of agriculture and grain production interests, which in turn renders their economic losses of water from ecosystems (Fang et al. 2007). Significant water previously utilized for agriculture has been transferred to urban systems to keep the industrial output, thus greatly affecting agriculture and grain production. Subsequently, agricultural systems and rural areas have to transfer water from ecosystems in order to lessen their economic loss. As a result, the eco-environment gradually deteriorates due to water scarcity. With the implementation of national policy on “Integrated Development of Western China,” plenty of water previously used for natural ecosystems and irrigation agriculture have been saved and used in industrial and urban systems to maintain the economic development.

Similarly, some of the fastest growing urban and industrial areas in the USA are located in this Basin. In the 1990s, the states in the CRB had the highest rates of population growth in the country. Roughly 30 million people depend on the CRB for drinking water, and its waters are essential to farmers, tribes, industries, anglers, power distributors, and rafters. In 1990–2000, Arizona’s population increased by approximately 40%, while Colorado’s population increased by about 30%. During 1960–2009, population in the seven states of CRB region grew by more than 166.4% compared with 77.2% for the whole USA. Even though many innovative urban water conservation programs have reduced per capita uses, population growth is driving increases in urban water demands.

Management Strategies

Water Allocation

Historically, the MDB in Australia and the CRB in the USA were also once faced with the urgent problems in terms of drought and water shortage issues (Dawadi and Ahmad 2012). Accordingly, the river basin management strategies have been gradually developed after consumptive extraction and confliction in water utility in the past decades.

Water contracts, water laws and agreements are types of water allocation strategy in terms of law and institutions. The MDB is perhaps the most exotic river system, in which a world scale water reform and planning have been used to reduce consumptive extraction to better sustain river ecosystems under climate variability. The MDB began to develop the River Murray Agreement as early as the year 1914 after several years of debate, droughts, and community actions. Since then, there have been various intergovernmental agreements related to the MDB water management. In 1987, the MDB Agreement superseded River Murray Agreement followed by negotiations beginning in 1985. In addition, in response to the “Millennium Drought” (1997 to early 2010), the Water Act 2007 from the Commonwealth Government is an ambitious piece of legislation that seeks to return water allocations in the MDB to sustainable levels. It marked a distinct shift away from the principles of consensus, negotiation and balance that were central to the decision-making process in the MDB during previous decades. The first and foremost aim is to enable the Commonwealth, in conjunction with the Basin States, to manage the basin water resources for the national interest. Also, it established the Commonwealth Environmental Water Holder (CEWH) with the objective of protecting and restoring the environmental assets of the Basin. A central aim of the Act was to centralize decision-making responsibility at the Federal Government level to both expedite adaptation and to manage the MDB as a whole, for the national interest.

In accordance with the Water Act 2007, the Murray–Darling Basin Authority (MDBA) took over the role from the MDB Commissions in 2008 as an independent, and expertise based statutory agency body responsible for overseeing water resource planning in the MDB. Aiming to provide leadership and collaborate with agencies and communities across the basin as a whole, the MDBA in its current and preceding forms has been managing aspects of the basin’s water resources for many years. One responsibility of the MDBA was to prepare, implement and enforce the Basin Plan and undertaking activities relevant to jurisdictional water resources. After a policy discussion paper released in October 2010, and the Proposed Basin Plan in November 2011, the MDBA released the revised Proposed Basin Plan in May 2012, and then Basin Plan being was signed into law in December 2012. It is based on managing basin water resources in the national interest rather than on jurisdictional or sectional based views.

Similarly, the CRB has the most complete allocation of its water resources, which is known as “Law of the River.” Firstly, the Colorado River Compact was negotiated between seven CRB states and the federal government in 1922. It suggested the basin be divided into an upper and lower half, with each basin having the right to develop and use a certain amount of water. Furthermore, the Compact gave to the Lower Basin the right to increase its annual beneficial consumptive use of water. In this way, it defined the relationship between the upper basin states where water supply originates, and the lower basin states where the water demands were developing. As time moves on, this compact has evolved over subsequent decades through additional federal acts, contracts, court decisions, and agreements for water from the Colorado apportioned to users (Dawadi and Ahmad 2012). The Boulder Canyon Project Act of 1928 ratified the 1922 Compact. It authorized the construction of Hoover Dam and other related irrigation facilities in the lower basin. Also, it authorized the secretary of the Interior as the sole contracting authority for water use in lower basin of the CBR.

In terms of the water agreement and lows, the California Seven Party Agreement of 1931 aimed to settle the long-standing conflict between California agricultural and municipal interests over the CRB water priorities, while the Mexican Water Treaty of 1944 committed the amount of water flow to Mexico. For the Upper river basin, the Upper Colorado River Basin Compact of 1948 created the Upper Colorado River Commission and apportioned the water for the upper states, followed by Colorado River Storage Project of 1956 provided a comprehensive wide water resource development plan and authorized the construction of projects for river regulation and power production, irrigation, and other uses. In addition to the above laws and contracts, there are several documents. All of these were collectively known as the “Law of the River.”

In contrast, lacking of effective coordinated water allocation scheme, the amount of water flowing into the lower reaches has continually been decreasing in the HRB. Some of the water allocation schemes have been implemented in the HRB in small scale. For instance, there are currently two main kinds of management strategies for community irrigation in the HRB: the collective management strategy and Water User Associations (WUAs) management strategy (Deng and Zhao 2015). WUAs are independent water management organizations, which take over the village leaders to be responsible for water allocation, channel maintenance, water charges and other relevant issues in a specific village. However, these are all implemented in the regional scale and the sustainable development of inland river basins needs an appropriate coordination among all the reaches. Also, a series of the water compact, water agreement and lows can also be adopted in the HRB.

Aside from water compacts, water laws and agreements, the principles on water markets, water price, water rights, and water policy have continued to play their role on river basin management. For the MDB, water management in Australia has changed profoundly around the year 1994. In response to the poor performance of inefficient government-owned utility-based industries, the Commonwealth Government transferred water delivery responsibility to the economic portfolio, and water was included in market-based competitive reforms under the National Competition Policy. The reforms also aimed to unbundle the property rights of water extraction from the ownership of land, thereby allowing the implementation of a water markets with tradable water entitlements to optimize productive output (Skinner and Langford 2013). Some of the principles remain relatively unchanged in the continued water resource management in Australia, including water planning, water price, water policy, as well as consultation, transparency and accountability.

Also, a series of water actions including water price, water right and water bank are also implemented in the CRB. One of marked water activities in the CRB is the agriculture–urban water transfer. Historically, the majority of water diversions have been for the irrigation purpose in the Western USA. Today, agriculture–urban water transfers are taking place throughout the CRB to increase water supplies. This water transfer from agriculture rights to municipalities is particularly dominant in Denver, Las Vegas, and Phoenix. With about 80% of Western US water supplies devoted to irrigated crop production, agricultural water appears to constitute the most important, and perhaps final, large source of available water for urban use in the arid Western USA. Under the water markets, these transactions often represent “win–win” situations for buyers and sellers, as water typically shifts from lower value agricultural uses to higher value urban uses.

According, there are three modes that have been implemented in the HRB for the irrigation: water price, water tickets, and water rights (Zhou et al. 2015). For the water price mode, the government would charge some fees for water services. For the water tickets mode, the farmers need to purchase water tickets from village leaders or WUAs before the farmland irrigation activities. The water rights mode refers to the water right card issued to farmers to guarantee their water consumption rights. However, these water allocation strategies are implemented in small scale and are limited to irrigation.

Water Organizations and Water Acts

Water organizations have a long history in Australia and the USA, and play an important role in the river basin management. For the MDB, the water organizations were developed together with water agreement to effectively implement the water compacts, water lows, and agreements. At the beginning, river Murray commission was established to administer the provisions of the River Murray Agreement. Thereafter, in response to the MDB Agreement, Murray–Darling Basin Commission was established in January 1988 as a replacement of River Murray Commission to efficiently manage and equitably distribute water resources. Furthermore, in order to optimize the economic, social, and environmental outcomes, the National Water Initiative (NWI) was approved by the COAG in 2004, and it is the Australian blueprint for water reform. The NWI reconfirmed the importance of water planning in achieving ecological and environment security. Key elements of the NWI included promotion of water trading and a commitment to restore a large amount of environmental flows to the MDB. The NWI sets out a number of specific objectives including effective water planning, clear, nationally compatible and secure water access entitlements, conjunctive management of surface water and ground water resources, resolution of overallocation and overuse, clear assignment of the risks associated with changes in future water availability, effective water accounting, open water markets, and effective structural adjustment. At the same time, Living Murray Initiative was set up to return water recovered through infrastructure upgrades and water buybacks. The Murray–Darling Basin Authority (MDBA) in its current and its preceding forms has been managing the basin’s water resources for many years.

For the CRB, the water banking and related authorities were established to ensure long-term offstream water supplies. The Arizona Water Banking Authority (AWBA), established in 1996 is a representative case. It aims to increase utilization of the state’s Colorado River entitlement and develop long-term storage credits for the state. Some of the water institutes in state level also contribute to the water storage and supply. Aimed to recover the water stored by the AWBA, for nearly two decades, the AWBA, the Arizona Department of Water Resources and the Central Arizona Water Conservation District have been engaged in an innovative program to store Colorado River water in the aquifers of Central and Southern Arizona.

In the HRB, as mentioned above, the collective management can be referred to as a simple form of water organization, where village leaders are in charge of the village water allocation, channel maintenance, water charges, and other relevant issues to fulfill their water management duties. In contrast, WUAs is independent water management organizations, which take over the village leaders to be responsible for water allocation, channel maintenance, water charges and other relevant issues in a specific village. In terms of the water organization of the whole river basin, the year 1997 witnessed the establishment of the Heihe River Basin Bureau for integrated management of water resource in the HRB. It is a significant milestone because it has allocated the water resource for five times among the HRB with the support of scientific research from Chinese scholars to alleviate the conflicts between natural water shortage and the high water consumption. Still, the big challenge is that different counties have its own management focuses and time schedules, leading to another kind of water waste.

Water Projects

The Sustainability of Semi-Arid Hydrology and Riparian Areas (then simplified as SAHRA) , which begun in 2000, was a good test to integrate scientific research to the sustainable management practices. In response to the rapidly growing water challenges due to the rapidly growing population and economy as well as climate change in semiarid or arid lands in the USA as well as in other parts of the world, the Center for Sustainability of SAHRA was founded in 2000. The main aim was to promote sustainable management of water resources by conducting water resources-related science, education, and knowledge transfer in the context of critical water management issues of semiarid and arid regions. Funded by NSF Science and Technology Center, the Center is in the University of Arizona, and numerous partner organizations also contributed to the Center.

At the end of the twentieth century, an Ecological Water Diversion Project (EWDP) was successfully implemented in the HRB by the Chinese central government. Numerous studies on water, atmosphere, ecology, and anthropogenic activities in the HRB have also been conducted. Recently, the National Natural Science Foundation of China launched a major research plan titled “Integrated Study of the Eco-hydrological Processes of the Heihe River Basin” (referred to as the “Heihe Plan”) in 2010. The “Heihe Plan” is a program that will help China advance the study of watershed science to international frontiers based on existing integrated studies of the Heihe River Basin. The scientific aim of the “Heihe Plan” is to improve the understanding of the formation and transformation mechanisms of water resources in inland river basins and the potential for sustainable management (Cheng et al. 2014).

Conclusion

Water scarcity and stress have attracted increasing attention, as water is regarded as one of the most critical resources for the sustainable development of the world. In the context of climate change and population growth, management of water resources faces pressures from different aspects, such as food security, ecological conservation, and human welfare. New thinking about water supply and demand is needed to simultaneously meet human and environmental demands for water in arid and semiarid areas. The supply-oriented approach can alleviate regional water scarcity through physical water storage and transfer, but is not the ultimate solution. A demand-oriented management by implementing market tools including price and water right can help to regulate water consumption and improve water use efficiency, but may face market failure. Holistic and integrated management approaches and innovations on how supply management, demand management and their integration can best be implemented will be necessary to develop sustainable systems so as to achieve outcomes of better economic, social, and environmental balance in arid and semiarid regions.

Integrated river management involves balancing sets of economic, environmental, and other interests. Positive trends include the incorporation of all the components of watershed, and taking the basin as a whole unit is fundamentally critical for integrated river management. Rivers in the arid or semiarid regions provide abundant topics of integrated river basin management. The arid and semiarid region in Northwest China, characterized by naturally limited water resources combined with unreasonable water utilization, is a representative case in which integrated river basin management has become a critical issue for socioeconomic development. In this study, the MDB, the CRB, and the HRB are selected as comparative cases due to the similar water issues and the experience in river basin management.

River basin management is a continuous process that involves decision-making and scientific study with the aim of achieving particular goals in the future. In order to achieve sustainable water utilization, water agreements, laws, institutions, organizations, and scientific projects all need to be improved and modified to meet different needs. Furthermore, it is necessary to develop strong communication channels between organizations, local communities, and NGO to provide social initiative and guarantee to help implementation of IWRM. Also, river basin management institutions and scientific river basin study should closely work together for integrated river basin management and development.