Impact of the Water Resource Tax on Efficiency of Industrial Water Resources Use: Evidence From Hebei Province, China

Abstract

China is facing a serious water shortage. The government's implementation of a water resource tax policy is an important step in the ecological protection of water resources. This paper constructs a stochastic frontier production function model to measure the industrial water resource utilization efficiency in Hebei Province under the consideration of water resource tax. Then, this paper constructs a model of the impact of water resource tax policy on industrial water resource utilization efficiency using the double difference method to evaluate the causal effect of the policy. The research findings of this article are: (1) Through discontinuity regression, it was found that the water resources tax policy has a significant positive correlation with the improvement of water resource utilization efficiency in Hebei Province. The implementation of the water resources tax policy has successfully improved the industrial water resource utilization in Hebei Province. (2) Although the implementation of the water resources tax policy has improved the efficiency of industrial water use in Hebei Province, the overall efficiency of industrial water use in Hebei Province is still low, and many problems have arisen during the advancement of the water resources tax policy. In response to the problems that occurred during the pilot period in Hebei Province, this article proposes some policy solutions to accelerate the advancement of water resource tax policies across the country.