An Innovative Emergy Quantification Method for Eco-economic Compensation for Agricultural Water Rights Trading

Agricultural water rights trading, involving the sale of saved irrigation water to users experiencing a water shortage, has become an efficient means of improving water use efficiency and optimizing water management. However, after the amount of irrigation water is reduced, it is prone to externalities, resulting in a decline in the ecosystem service functions of water sellers and economic, social, ecological, and environmental losses. Sufficient compensation for such losses is the key to the sustainable development of water markets. Based on the emergy theory of ecological economics and externality theory, the eco-economic losses of water sellers caused by agricultural water rights trading are analysed. An innovative emergy quantification method that includes economic, social, and eco-environmental compensation is proposed. Additionally, eco-economic compensation for water rights trading in Dongyang-Yiwu, China, is quantified as a case study. The results show that eco-economic compensation has generally risen continuously, from 94 million Chinese Yuan (¥) in 2013 to ¥114 million in 2017. Taking 2005 as the base year, this study finds that the present value of eco-economic compensation is ¥755 million, while the actual trading price is only ¥256 million. These results indicate that the actual price does not fully reflect the economic, social, and eco-environmental losses caused by trading. The method proposed in this study can provide a reference for the reasonable quantification of the compensation of water sellers.