Abstract:
Despite the rise in importance of the private sector in the expansion of the use of groundwater in China and the potential implications this might have for production and poverty, little has been written about the effect of these phenomena on northern China’s economy. In examining determinants of tubewell privatization and its impact on producers in northern China, data were collected using a community leader survey, carried out in 448 villages in six provinces in northern China. The results show that since 1990 collective ownership of tubewells has largely been replaced by private ownership. Increasing water scarcity, government grants and bank loans for tubewell investment and the declining investment capacity of China’s local communities have led to the observed change in tubewell ownership patterns. By far, the most important positive effect on income appears to be due to the expansion of newly irrigated area that has been fueled by the rise of private tubewells. Many newly private tubewells also have begun to replace irrigation from surface water sources. While helping increase income and productivity, the rise of private tubewells also has contributed to the fall in groundwater levels.
