Is water use sustainable and efficient in China? Evidence from a macro level analysis

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)6166–6183
Journal / PublicationApplied Economics
Issue number53
Online published11 Jun 2021
Publication statusPublished - 2021


This paper measures the performance and efficiency dynamics of provincial water use by differentiating the long-run persistent efficiency from the short-run transient efficiency. We combine the econometric frontier approach with panel Markov-switching and Tobit estimations to investigate the macro level data over the period 2002–2016. The results reveal evidence of significant provincial and regional disparities, with a mean efficiency of 0.42 in terms of water use. We find that a large share of inefficiency is attributed to the long-term structural component, with persistency inefficiency estimated as 55%. We also find that the probability of maintaining efficient is less sustainable (about 48.5% by the sixth year) compared with 54.3% for staying inefficient. Thus, it is relatively difficult to transition out of the less efficient state. We thus suggest policy directions for sustainable and efficient management of water resource use.

Research Area(s)

  • China, efficiency, Markov-switch, transition, Water use