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Water resources in Taiwan is so limited that the average
amount of water oneca n use is much lower than that of the
world''s. As the allocation of waterresour ces is concerned,
farm sector takes a relatively larger proportion.From the po
int of economic efficiency, it would do good to economic
developmentif we coul d reallocate water resources.In addition,
we should take food safetyand tradit ional culture of farm
villiages into consideration when reallocatingwater reso urces
among sectors. As a result, this paper attempts to establish
amodel to m easure the optimal quantity and price of water
transfer.Our majorfindings are: 1. When water is traded between
sectors, urban water users willbe considerably better off by
virtue of cheaper supplies and the agriculturalsector will do v
oluntarily in response to prices offered for their water by
theurban sector, b ecause they can get gains from intersectoral
water trading. 2.Water trade betw een sectors will cause two
effects, one is the decline inoverall use of water due to
trading incentives make each sector save its wateruse; the other
one is agricultural sector will reduce water use and serve
asdrought insurance or se ll water to other sectors for getting
benefits.3.Financial, environmental and social problems caused
by the investment fordeveloping new water resources, ca n be
solved by market mechanism. 4. Beforetrading, the water prices
of agricul tural sectors are 1.86, 4.40 and 6.00 NTdollars per
ton FOR 1990,2010 and 2025 ,respectively, While the water
prices ofindustrial and municipal sectors are 8 .91, 16.46 and
23.37 NT dollars per ton.The quantity of agricultural sectors a
re 10.10, 10.03 and 9.88 million ton, andthe quantity of water
of industrial a nd municipal sectors are 1.55, 1.30 and1.05
million ton. 5. After trading, the quantity of water of
agriculturalsectors are 9.34, 9.21 and 8.94 million ton for
1990, 2010 and 2025respectively, While the water prices are
2.98, 5.93 and 8.68 NT dollars perton respectively. the
quantity of water for industrial and municipal are 1.68, 1.57
and 1.48 millions ton, the water prices are 6.48, 11 .93 and
16.68 NTdollars per ton, respectively. 6. Under the present
allocation , consideringthe effects on water price and
quantity with the competing use o f newindustrial parks. we
find that the estimated amount of water for farm sec torthe
water price will be 8.57 and 11.45 NT dollars per ton. Besides,
theamou nt of water for municipal and industrial sector will be
0.142 and 0.131billion ton ,and the price will be 14.57 and
19.45 NT dollars per ton. 7. Ifthe value fixed in 1990 dollars
, then the benefits of trading are99,400,000 , 190,890, 000 and
207,862,000 NT dollars for 1990, 2010 and 2025respectively. 8.
If the value fixed in 1990 dollars the compensative
pricerespectively.
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