Controlling groundwater through smart card machines. The case of water quotas and pricing mechanisms in Gansu Province, China

GRIPP Case Profile - Issue 02

Abstract

Since the 1970s, intensive groundwater abstraction by smallholder farmers has led to falling groundwater levels and related problems in many parts of North China. The 2002 revised Water Law urges local authorities to regulate groundwater use in regions of overdraft. This GRIPP Case Profile documents two cases of local groundwater abstraction regulation in Gansu Province, Northwest China, based on primary data collection. In both cases, smart card machines were installed on farmers’ wells to control groundwater abstraction. However, in the case of Minqin County, the local authorities opted for quotas, while in the case of Guazhou County, they opted for tiered water pricing as a regulation instrument. The quotas in Minqin have been implemented in a way that directly affected farmers’ groundwater use practices. Consequently, farmers are no longer free to decide when and how much groundwater to use. The tiered water pricing in Guazhou has had little implications for farmers’ individual groundwater use practices. The pricing threshold is flattened out at farm group level and the price is not raised to a level which instills behavioral change. Hence, it can be concluded that the potential of smart card machines to control groundwater abstraction is highly dependent on the design and implementation of the regulatory mechanism behind the machines. Although the present study cannot draw hard conclusions on the effectiveness of quotas and pricing mechanisms per se, it does provide an indication that, in the given societal context, the practicability of quotas to reduce farmers’ groundwater abstraction is higher than that of tiered pricing. Notably, the case of Minqin exemplifies that quotas lend themselves well to ensure equitable water access to all farmers and maintain the buffer function of conjunctive surface water and groundwater use. These are important principles to design effective groundwater regulation policies, both in and outside China.