Potential and Restrictive Factors of Water Rights Transaction in China''s Industries
中国产业间水权交易潜力及制约因素初步分析

Comparative analysis on the structure of water use and industry is carried out to explore internal forces driving inter-industry's water rights transaction. Predictive analysis of water rights transaction status of the three industries is made based on water use efficiency and economic incentives. It is concluded that the liner relationship between the share of the secondary industry and industrial water use is not significant, but the second industry would become a potential demander as far as accelerating industrialization policy is concerned. And the tertiary industry would become another demander in inter-industry water rights transaction since there is a strong liner correlation between the proportion of domestic water use and share of tertiary industry. Two driving forces to promote inter-industry water rights transaction are identified. One is the physical basis, which is the difference in profit of per cubic meter water used for the three industries; the other is economic incentives, which is illustrated with an example of the price discrimination among industries in Beijing. The potential of inter-industry water rights transaction is estimated by analyzing evolution of industrial structure. It is showed that there would be a water rights transaction with an amount of at least 55 million cubic meters among the three industries. The characteristics of inter-industry water rights transaction is concluded as following:1) Congregative transaction subjects; 2) Differential objects; 3) Diversity of transaction contents and forms; 4) Transaction occurs in the same direction as industrial structural evolution. At the end, factors restricting such transaction are analyzed mainly from three aspects: 1) Unclear legislation concerned; 2) Lack of effective measures lowering transaction cost; and 3) Improper role of government in carrying out its function. Therefore, improvement in institutional performance would be a key step in promoting inter-industry water rights transaction.