Optimization of water resource tax policy schemes to achieve triple dividends

In a socioeconomic system, water consumption, carbon emission, and economic development are closely related. Previous studies suggest that water resource taxes can achieve water conservation, but may impose negative impacts on economic development. Due to the close relationships among socioeconomic sectors, the application of water resource tax will change the trade-offs among water conservation, carbon emission reduction, and economic growth (i.e., triple dividends) at the scale of the whole economic system. To achieve dividends at the scale of the whole economic system, we established a computable general equilibrium model to combine the water resource tax policy with tax revenue recycling (reinvestment) measures. Furthermore, we combined the model with an optimization model to identify ideal different policies. We used Hebei Province, a region in China characterized by substantial water consumption and high carbon emission, as a case study. We found that the water resource tax provided a dividend by recycling revenue to benefit production sectors and households, and could simultaneously achieve carbon emission reduction, water conservation, and economic growth, thereby achieving triple dividends.