Editorial — Volume 8 Issue 2 (April 2022)
1. Introduction
The five research papers in the Second Issue of Volume 8 of Water Economics and Policy (WEP) address the performance of policies aimed at environmental and water quality and the value of irrigation water and rural development. The papers in this Issue employ a variety of approaches and methods such as: econometric models to explain differences in the implementation of China’s clean water policies (Xu); role and effectiveness of internal monitoring of pollution in compliance with the effluent limits set by the Clean Water Act (Brandes and Earnhart); a content analysis of a water resources management policy in China that was recently implemented (Cheng, Wang, Ouyang, Wang, and Song); a regression analysis of smallholder irrigators to estimate the value of irrigation water in the Awash River Basin in Ethiopia (Tessema, Alamirew, Charles, and Zeleke); and development of a conceptual model applied in Portugal to assess the literacy of water consumers regarding water-quality issues in the residential sector (Fernandes, Figueiredo, Neves, and Vicente).
2. Overview of the Papers in this Issue
2.1. “Explaining Provincial Variation in Implementation of China’s Clean Water Policies” by Xu
There has been a growing interest in the role of decentralization in successful policy reforms in many sectors, including the water sector (Dinar et al.2007; Blomquist et al.2010). This paper explains variations in the extent of implementation of China’s clean water policies at the provincial levels. The analysis assesses the roles of fiscal decentralization, environmental decentralization, and interest group pressure, using a series of panel data of Chinese provinces between 2004 and 2015. The departing hypothesis is that in China, the implementation of environmental policies at the provincial level is closely related to its fiscal and environmental decentralization reforms. Contrary to some previous works, arguing that decentralization has negative regulatory effects on environmental management, a vast part of the literature suggests that there is evidence that this is not always the case, which is one of the hypotheses to be inferred by the author of this paper.
The author uses very rich data sources in China from 2004 to 2015 that include information on local per-capita expenditures, pollutants, environmental impact assessments, environmental management personnel, environmental petitions, and water-use intensity. In addition, the data at provincial level include budgetary expenditures and per-capita GDP and the performances of various industries and sub-regions as well as positions of provincial leaders.
Findings suggest that: (1) fiscal decentralization has a significant positive effect on policy performance as measured using per-capita provincial expenditures on industrial wastewater. But it has no significant influence on policy outcome as measured by per-capita emissions of COD. (2) While increasing environmental decentralization at the provincial level tends to increase provincial expenditures, it also increases wastewater discharge. The first and second findings may balance each other, in terms of negative environmental effects. (3) Also, increased industrial contributions to the provincial economy are associated with increased environmental spending by the province. The author did not find the expected impact from the foreign trade and environmental petitions by the industrial sector. The author concludes that the clean water policy reform in China increased provincial policy responses, but without significantly improving the environmental-quality outcomes.
2.2. “The Influence of Internal Monitoring on Compliance with Effluent Limits” by Brandes and Earnhart
This paper analyzes the effect of one environmental management practice, the internal monitoring, on point-source-regulated facilities’ compliance with wastewater effluent discharge limits set by the Clean Water Act and regulated by the US Environmental Protection Agency (USEPA). If environmental management practices improve the compliance of polluters, their use should reduce the likelihood of costly regulatory inspections and socially costly enforcement actions. However, these positive results follow only if such pollution-prevention environmental management practices indeed reduce pollution. Such beneficial environmental management practices have been promoted by the EPA in regulated facilities. Internal monitoring and self-audits are two similar “own” pollution-prevention regulatory approaches, which may serve as substitutes. Therefore, information from either approach is sufficient for improving the environmental performance.
The authors employ a panel dataset with information on effluent limits faced, and discharges generated by chemical manufacturing facilities regulated under the Clean Water Act between 2002 and 2003. The pollution permits require the facilities to self-report their discharges. Since effluent limit levels vary across facilities and over time, examining the discharge quantities is insufficient for understanding the facilities’ environmental compliance. Therefore, the authors measure the extent of compliance by using the ratio of actual pollution to permitted pollution level, coined as “discharge ratio” and used as the dependent variable in their monitoring performance regression analysis.
The authors draw/sample observations from a dataset that included 2,596 chemical facilities. The sample represents a panel of 76 facilities with 13 periods of monthly data during the years of 2001–2003. Thus, the unit of observation is an individual facility discharging in each month. At the end, the sample includes 980 observations. The authors apply several statistical modeling approaches to the entire sample and cut through the sample. In addition to estimating compliance rates, the authors also compare the benefits of internal monitoring to its costs. The regression coefficients indicate that facilities that implement more sophisticated internal monitoring, especially the monitoring of influent, which provides information useful for pollution prevention, comply better with their discharge limits. The extended empirical results suggest that audits complement internal monitoring (and vice versa): as facilities audit more frequently, the productive effect of increased internal monitoring grows. The policy implications from the analysis in this paper suggest that EPA can help reduce the social cost of compliance with the Clean Water Act by promoting internal monitoring conducted by the individual regulated facilities.
2.3. “A Content Analysis of the Strictest Water Resources Management Policy in China” by Cheng et al.
The authors of this paper adopt a text mining and content analysis approach to identify the characteristics and trends of water governance, using the Strictest Water Resources Management Policy (SWRM) that was developed and applied in China around 2009–2012. SWRM is an important water policy system that aims to deal with water shortage, water pollution, and institutional disfunctioning in China. The authors construct an analytical framework that combines policy instruments and policy targets, and then code and classify policy instruments appearing in the policy text and estimate the statistical relationship to quantify the roles of policy interventions in reaching policy goals. The results identify structural imbalance in the major policy instruments in SWRM. Most of the policy instruments in SWRM are focused on institutional management, followed by resource allocation, technological progress, and environmental quality.
The paper describes the policy “data” selection, which is by itself an important methodology, based on scientific principles, as follows: policy documents issued by State Council and provincial governments were selected. A total of 30 qualified policy documents were checked and collected and were subject to the content analysis. The analysis was conducted in a two-dimensional space — policy instruments and policy targets. Policy instruments include voluntary policy instruments (such as incentives), mandatory policy instruments (such as policy that uses government authority and force, including laws and regulations), and hybrid policy instruments (that include both). Policy targets include resource allocation, institutional management, technical progress, and environmental quality.
The results based on the four water policy targets used in the paper, in combination with the assessment of SWRM by the Ministry of Water Resources over three years, suggest clearly that water resources supervision has been strengthened, water resources protection has continued to improve, and water resources management has reached remarkable levels since the implementation of SWRM, most significantly the improvement of environmental quality. However, several shortcomings in the implementation of SWRM exist. Examples include: high total water consumption, not reaching yet the targeted water-saving priority, and water resources supervision and water resources protection still needing improvement, especially the protection of rivers and lakes. In addition, institutional development and management take the most of SWRM, aiming to solve the problems of water shortages and imbalance between supply and demand. Presently, the environmental protection of water resources indicates that only nearly 5% of the policy instruments were under the policy target of environment improvements.
2.4. “The Economics of Irrigation Water: Empirical Evidence from the Awash River Basin, Ethiopia” by Tessema et al.
This paper supports the long-argued claim of a positive contribution of irrigation to smallholder farmers in developing countries through productivity, income, food security, and overall economic growth. The authors collect primary data from Ethiopia’s Awash River Basin, which is the third largest river basin of the 12 river basins in Ethiopia. It is the most exploited river basin in the country for both irrigation and other purposes. As such, the performance of irrigated agriculture in this river basin represents the conditions irrigators face not only in Ethiopia, but also in many other countries.
The study leading to this paper collected rich primary data from irrigation hotspots in the Awash River Basin, Ethiopia. The data allowed to provide some qualitative evidence on the economic trade-offs of irrigation water uses at both the farm and basin levels. In addition, the authors provide accurate measures of the intensity of irrigation water use for various crops in different parts of the Basin by smallholder farmers. And finally, the authors also quantitatively evaluate the indirect effect of irrigation by way of stimulating chemical fertilizer uptake for enhancing crop productivity, especially in the case of lower soil productivity, on many of Ethiopia’s highland regions. Data was collected via a survey of individual farmers. The estimation strategy used is the propensity score matching (PSM) model. A total of 814 observations were used to estimate the gross margin models and 225 observations were used to estimate the likelihood and extent of chemical fertilizer applications. Models estimating determinants of welfare, measured as the gross margin and level of applied chemical fertilizers, provide very significant results and useful information for policy.
The estimates show that while increasing the gross margin of crop production by about 50%, irrigation also increases the chemical fertilizer application on irrigated maize by over threefold. These findings can be used to evaluate the cost-effectiveness of irrigation as a poverty reduction strategy compared to other pro-poor development strategies. The authors discuss several possible negative effects of such strategy. While they talk in general terms about the effects of one part of the Basin on other parts of the Basin, it is clearly implicit that increasing the chemical fertilizer application by over threefold may result in chemical pollution of rivers and groundwater downstream, and this has to be made part of the benefit–cost equation in future work.
2.5. “A Conceptual Model to Assess the Literacy of Water Consumers” by Fernandes et al.
Water quality and its impact on population in both the developing and the developed world has been on the rise in recent years. The ability of households to face water-quality issues and address them for their own protection by making educated decisions (e.g., consumption, monitoring), that affect their behavior and lifestyle, is an important policy issue for water agencies. The authors of this paper adopted the definition of the World Health Organization for health literacy as the set of cognitive and social skills that determine individual motivation and skills, and enable access, understanding, and use of information in health promotion and applied it to the water sector in Portugal.
Given the scant number of previous works on this topic, the authors developed a conceptual model for the study of Water Consumption Literacy. The model refers to the three dimensions of Water Consumption Literacy, namely water quality, disease prevention, and public health promotion. In each dimension there are four competencies — access, understand, appraise, and apply information related to water consumption, that were included in a questionnaire administered to collect the data needed for the implementation of the model investigated. Each competency was measured by four levels of difficulty: Very Easy, Easy, Difficult, and Very Difficult. The factors that can influence the dimensions described above are the literacy of consumers on the subject, the recognition of the need to consume regulated water, the existence of accredited laboratories to test water quality, and the existence of water treatment services. Such factors lead from a person-centered perspective to a community-focused perspective. Therefore, the proposed conceptual model refers to literacy on water consumption in a broader perspective aiming to contribute to global water sustainability.
Results regarding the levels of difficulty that the respondents assigned to the different questions suggest that the majority of the respondents feel that it is difficult/very difficult for them to deal with water-quality and disease prevention issues, while the majority of the respondents indicated that it was very easy/easy to comprehend public health promotion information. These results suggest that the respondents can follow the instructions of health professionals even when having low levels of literacy on this topic. Based on the results, it is suggested that the promotion of positive attitudes regarding water is required in order to achieve the water conservation goals and thus, authorities should subsidize water-saving devices and water-quality-regulating products.
3. Synthesis and Policy Implications
The main focus of the papers in this Issue of WEP is on water quality and water pollution either directly or indirectly. Several overlapping conclusions and policy implications can be derived from the papers in this Issue of Water Economics and Policy. As shown by Xu, by Brandes and Earnhart, by Cheng et al., and by Fernandes et al., policy performance is affected by a variety of variables, including the level of communication between the policymakers and the individuals or the agencies that are subject to the policy. In addition, the studies in the Issue showed that the level of human capital of the individuals or the agencies regulated by the policy will affect their performance under the policy. And finally, the works also showed that a sufficient level of infrastructure may be needed in order to allow individuals or agencies to respond adequately to policies, in this case the policies aimed at environmental protection and water-quality regulations. The conclusion from the paper by Tessema et al. highlights the stimulating effect of irrigation water availability on chemical fertilizer uptake that results in increased crop productivity. At the same time, increased application of chemical fertilizers may lead to increased pollution of the water sources downstream, which also has to be considered in the overall benefit–cost analysis.
