Study on the cointegration relationship between water supply and demand in the irrigation district with structural breaks

Abstract To explain the impact of agricultural policy on the relationship between water supply and demand in the irrigation district, the cointegration theory with structural breaks is introduced in this study. The results show that the structural breaks caused by the agricultural policy on the relationship between water supply and demand occur in 1981 and 1989. Moreover, water supply and demand have the long run cointegration equilibrium and short run dynamic changes with or without structural breaks. Error correction models with or without structural breaks are established, but three error correction models with structural breaks present higher simulation accuracy than the error correction model without structural breaks. Especially for the model 3, it has the largest goodness-of-fit of about 0.91, and its relative error less than 5% occupies for 46.51%. There are still some limitations in this study. If groundwater and other factors are taken into consideration in the calculation of irrigation water, and the changes of the crop coefficient (Kc) value in different periods are considered in the calculation of crop water requirement, the results will be more accurate.