Do Water Transfer Projects Promote Water Use Efficiency? Case Study of South-to-North Water Transfer Project in Yellow River Basin of China

With a huge capital and labor input influx, inter-basin water transfer (IBWT) projects have been shown to effectively mitigate water stress and ensure the water demand for social and economic development in the receiving area. Whether they have promoted the improvement of regional water use efficiency (WUE) is crucial for sustainable management of regional water resources. Targeting the South-to-North Water Transfer Project (SNWTP), the largest and most ambitious inter-basin water transfer project in China, this study establishes quantitatively econometric models to analyze the impact of different water diversion projects, specifically the eastern route of the SNWTP (ER-SNWTP), middle route of the SNWTP (MR-SNWTP), and diversion from the main stream of the Yellow River (DYR), on the regional water consumption per unit of GDP; regional water stress, water use structure, economic structure, and urbanization level are used as control variables in different types of cities in the Yellow River Basin, and some intriguing results are found. While the overall water transfer project demonstrates a positive impact on water use efficiency, the effects of the three water transfer measures vary significantly. The ER-SNWTP does not exhibit a notable positive effect on regional water use efficiency, whereas the MR-SNWTP demonstrates a significant positive impact. Interestingly, the DYR has a notable negative influence on water use efficiency in developed cities. The water use structure, shaped by the pricing, scale, and policies of different projects, emerges as a pivotal factor in explaining these differences. Finally, this paper suggests that the impact of water transfer projects on the improvement of regional water use efficiency be viewed from a more comprehensive and developmental perspective.