The shadow prices and demand elasticities of agricultural water in China: A StoNED-based analysis

Based on stochastic nonparametric envelopment of data, this paper estimates the shadow prices of agricultural water and the technical efficiencies, using an input-output data of 30 provincial units in Mainland China from 2002 to 2012. The results show that the average shadow price estimates for agricultural water range between 2.57 yuan/m(3) and 3.88 yuan/m(3); the estimated price elasticity of agricultural water is 0.12, and that improving technical efficiencies of the agricultural sector has a significant effect on the water demand. That means the prospect of reducing the amount of agricultural water depends on the improvement of technical efficiency and the spread of water-saving irrigation techniques.