Defect and Innovation of Water Rights System

Defect and Innovation ofWater Rights SystemZhou BinOcean University of China, Qingdao Shandong 266003, ChinaAbstract: The rare deposition of water resources conflicts withcommunal characteristic of water rights is always arrangedis limitles demand This determined the existence of the wateras the public water rights system. The ownership of waterrights transaction system. The implermentation of the water rightsrights belongs to the nation and the water rights sbould betransaction system requires caifying the defintion of water e granted by the national govemment department. Because ofsource right above all distinctly. At present, it is a kind of commonthis, water rights grow especially slowly in China, whichright system arangement which needs the Chinese govemment tobecomes one of the Law of Natural Resources that embod-dispose of water resources. Though a series of management sys-ies a planned economic train of thoughts, particularly thetems guaranteed the govermment's supply of water resource, itmost sufficient system distribution among all nature re-hindered the development of the water market seriously andsources' train of thoughts that the govemment suppliedcaused the utilization of water resources to stay in the infficient(Xiao and Xiao, 199).or low eficient state for a long time. Thus, we should change theAccording to the propriety system distribution to checkgovemment's leading role in the resource distribution and reallythe water resource propriety system's structure, generallyrely on the market to carry on the water rights trade and transac-tion. In this way, the water rights could become a kind of privateChinese water resource propriety system arrangement is aproperty right relatively, and circulate frely in the market. As astate- owned water rights system. Water rights are consid-result of this, we should overcome the defects of common right,ered as public water rights to be dispensed; they insist onmake its external performance intemalized maximally and achievethe public ownership theory of water resources, whichthe optimized water resource disposition and use it more efec-means that the owner is the country. At the utilization as-pect of water resources, the nation carries out a water righttively.Key words: water rights, common righ, exclusivity, transferabilitylicensing system along with a compensation system. More-over, the water law has some detailed regulations on ex-Along with the increase of economy, society and popula- ploiting and utilizing water resources and their relevanttion, the rebirth capacity of water resources cannot satisfyadvantageous and disadvantageous reltionships' adjust-buman demands as the same as before. Water resourcesments, which includes that exploiting and utilizing waterbecome a kind of rare resources compared with the initialresources sbould insist on the combination of encouragingplentiful state, and also become the biggest bottleneck thatbenefits and removing disadvantages. Giving attention torestricts economic and social development. Facing the lackboth upper and lower reaches, on both left and right banksof or even exhausted water resources day by day, possibleand also related areas' behalf, water resources' integratedaltermatives is through obeying the law criterion to utilizebeneft is brought into play, obeying the present flood col-water resources more effectively, which aims to use it con-lctive arrangement; exploiting and utilizing water re-tinuously. Therefore, investigating bow to better performsources should satisfy all citizens' daily water demands forthe water rights system's efficacy, solve the lack of waterlife above all, and also give atention to agriculture, industry,resource problem, and implement a continuous develop-zoology environment and ships' requirements, etc. At theaspect of water rights trade, the current Chinese laws forbidment object has significant realistic meaning.any trade and transfer of water rights. Though the waterlaw (2002) prescribes carrying out the water right licensing1 Water rights system distibution in Chinasystem along with the compensation system to water re-sources, and the State Council (China) W ater Administra-At present, Chinese water rights system includes is Wa-tive Department takes charge of the implementation of theter resource ownership and water nights system. In China, thewater right licensine svstem alone with the compensation中国煤化工Corespooding author: Zhou Bin Vvackie1970@163.com)CNMHGsystem nationwide, but there is no actual regulation of 2 Cost of water rights system In Chinawater rights trade. Furthermore, the State Council (China)established the fimplementing methods of the water rightsAccording to Chinese laws, water resource property be-system’that has a clear regulation that water right licens-longs to the state, but the actual right owners are all levelsing cannot be transferred. When the water right licensing of institutions in each province, city and town. Local gov-expired, the certification would be invalidated automati-emments become the benefits' delegates of the ownershipcally. For those who transferred their water right licenses, that water resources' drainage areas flow; consequently thisthe water administrative department or the departmentforms a kind of property right structure which is similarthat granted the water right licenses can confiscate theirwith the mutual property right, and all local govermmentsilelgal income. While dealing with the water resource have the authority to use water resources. Local goverm-ownership and usufruct's dissension, the administativements as local benefts' delegates would consider the costprocess takes place first in China. In practice, unexploitedand benefts of using water resources, and also exploit andand unutilized water resources and relevant benefits andutilize water resources to the maximum in order to achievepossible conflicts are all solved by the administrativeas much value as they can. The water rights system themethods.Chinese govermment adopts now is not only free to localAs all above indicated, since the People's Republic ofgovemments but also leads to their unlimited desire ofChina was established, especially after the reform andgetting more advantages from water resources. This leadsopening-up in that 20 years, water management systemsto the excess piloting of water encouragement, which is thehave been changed. Now China has formned a series of pub-tragedies of common land'(Daly and Townsend, 2001). Iflic water rights systems based on the administrative in-we require more than the total amount of water resources,strument. Although the exclusivity of water nights has beenfinal results would definitely be to dry up all water re-increased since the implementation of a series of manage-sources.ment systems, water rights' external performance is stillThe Chinese Water Law stipulates the ownership of wa-high and the efficiency of water rights' exertion is stll ater resources would be exercised by the State Departmentlittle bit low, which is what we are saying now the phe-nomenon of 'water rights ilgibility' is quite serious. Wa-representing the nation. This enables govemments to sup-ter rights ilelibility is a kind of logical economic phe-ply, distribute, operate and manage natural resources andnomena in stated historical conditions, mainly becausealso enables government delegates or acts as an agent ofclarifying the definition of water rights costs a lot, andthe State to arrange most of Chinese natural resources.adopting the method of water rights llgibili could saveGovernmental ownership and administrative power are aexclusivity cost. The administrative instrument is the real-combined collocation; the key representation of govern-istic choice in order to save cost in the macro environment,ments exercising resource property rights is resource ad-but priority llibilit is the essential of the administrativeministrative managerment. According to resource varieties,distribution of the water rights system. The current waterthere are integrated administrative departments existingrights system distribution is the balance of the ilgibilityfrom the central to local levels of govermments. Whereasof water rights, which has caused internal managerial ex-all levels of govemments and departments and their ad-penditure and loosened the efficient utilization of waterministrative managerial authorities have been adjusted andresources and the adninistrative water disribution that has changed many times, the administrative rights of naturalsaved cost. However, because this public water rights sys-resources' distribution and control are enhancing. Resourcetem arrangement ensures that the Chinese govemment sup- administrative management has been replaced by resourceplies water resources suesfully and also blocks the de-property right management, which has directly damagedvelopment of the Chinese water resource market, this leads property right chasing after the economic dynamic struc-to resource utilization to be in the inefficient or low effl-ture and also influenced resource administrative manage-cient state for a long time, which becomes the evidence of ment to be in the inefficient or low efficient as the normalcurrent water resource waste and damage.state. .中国煤化工MHCNMHG2 Chinese Jourmal ofPopulation, Resoures and Eoviromcat 2008 Vol.6No.2Unified drainage area management institutions are al- design, the govemment affords a great deal of work duringways located in Chinese great river drainage areas; how-negotiation; there are too many man-made disturbing fac-ever, this could not solve various, local govermments' bene-tors, and water using families and investors could not holdfit conflicts effectively. Because previous administrativethe situation of water supply in lack of water in advancemanagement has a deep foundation, plus 'Water Law' bad(Guang Ming Daily, 2001)", which leads to illegibility ofendued drainage areas' managerial institutions unclear au-property rights'; it is the biggest hindrance that blocks wa-thorities, combination of drainage areas' management andter market development.administrative regionalization management; therefore, allThus it can be seen that along with the enhancinglevels of local regions still have biggish authority. Withinshortage of water, the ilegibility of property rights hasthe current system, drainage area managerial institutionsmuch more expense, and the cost of the public water rightsassociate with water conservancy as a leader, organizingsystem based on administrative methods is increasing. Re-delegates of all levels of local areas and water conservancylying on the previous water rights system could not solveprojects, which are main relevant productive bodies to ne-the lack of water resources efficiently and it would bringgotiate about a recent new and popular theory and practicalaustere water resource supply conflicts. It is necessary tomethod. Although this method has considered fair rightgo along water rights trade to achieve the worth and efe-treats to relevant productive main bodies. Because of plu-tive utilization of water resources. Dongyang in Zhejiangralism and huge amounts of productive main bodies, theProvince, local govermments in Yiwu doing 'water rightscost of negotiating between them is highly expensive; fur-trade' bas been counted as the first signs in water rightsthermore, it is also difficult to come to an agreement. As atrade in China; however, this is the 'management trade' inresult, this democratic negotiation method takes care ofwhich govemments participate, not *bargaining transac-fairmess, and its benefts could be rebated and could onlytion'. Products have been traded as governmental property,be used in the initial stage of water right distribution.and the result of the trade is using an administrative con-The Chinese Water Law regulates that the nation im-tract method to assort with govemmental or local conflictsplements the water right licensing system along with theand benefits. The govermments are mangers and alsocompensation system. The water right licensing systemswappers at the same time; administrative rights are con-actually is a form of initial water right ditribution, whichfused with property rights and conflicts between them haveis in precondition that the nation has the ownership of wa-weaken or lost property rights, and also given administra-ter resources and endues water using families with a righttive right authority and benefits conglutination characters.of using and gaining income from water resources. On theParticularly as trade products' water resources do not haveother hand, as water using families do not have clear mainclear boundaries. Hence the current water rights system'sbody status, their water nights do not have stability in thetransitional aspect should clarify the connotation that waterlong run, and it could not be transferred, which could notrights have, and trade water rights in the market.cover all water resource using behaviors; water administra-tive departments have excess rights, and the single admin-istrative managerial system is lacking adjustments of the3 Innovation of water rights system In Chinamarket mechanism and participants of water using families,which leads to ilogical distribution and waste of waterAs the framer and mender of regulations, govermmentsresources; no monitoring managerial system, low trans-are playing significant roles in the water rights transforma-parence, unscientific control of water right licensing sys-tion, and they will continually exert their functions in thetem, no meticulous definition of water amount distribution,future. This is because many environmental resources havemaneuverability is not strong; huge difference betweenthe atributes of public goods. But even public goods couldhigh investment and low return in adjusting water engi-produce plus net contribution; the possibility of existingneering has caused waste of national resources,“especiallymarket supplies of public goods is quite low, and the re-in drought periods, usually with the trend to implement sults are evaluated from the point of social efficiency; theadministrative adjustment as the central temporary projectentire market economy could provide only a litle. In addi-中国煤化工MHCNMHGCainese Journal ofPopulaio, Resoures and Eoviromment 208 Vol.6No.233tion, even if in a plenty developed private market, the sup-rights might not be only logical but also enable the integerplement of the market of public goods could be inefficient; to be effective. Hence, because of the existing cost problem,and the possibility of the existence of this supposition isto the society, private property rights are tally not excel-really low. Conclusion is that there must be govemmental lent but some public property rights are the best (Cooterparticipantion in order to improve efficiency (Perman and and Ulen, 2002). Because of the expensive cost of the totalHou, 2002). However, according to North 1991 “existing deinition of water resource property rights (which alsoof a country is the key of cconomic development; however,means establishing a private water rights system), the mainthe county is also the root of man-made economic depres- body form of the water rights structure would still be pub-sion (North, 1991)”. A good goverment is not the one who lic property rights, but its intermal exclusivity could be im-charges more, and the eficiency of a govemment is much proved; the main body of water rights could also be plural,more important than its size. An effective govermmentwhich includes all levels of govemments, organizations,could definitely bring lower trade cost to property rights co-operations, huge water using families and even indi-(Spulber et al, 199).viduals.Kos theorem's second law states that trade cost exists inpractice and the law which enables trade cost to exert3.2 Effective distributionminimum influence is the most suitable law (Posner andInitial water rights' acquisition and distribution is theJiang, 1997). So how to restructure the water law system inkey of establishing complete functional markets both buy-China needs to sufficiently review the system's cost anders and sellers adopt, because once they acquire waterbehalf, to the minimum cost of the exploitation and utiliza-rights, it means gaining some property and along with thetion of water resources and the maximum value of man-time process this property would be more worthy. Initialagement; the best water rights law system is the one whichwater rights ditribution means the distribution behaviorhas the lowest trade cost influence. Accordingly, we shouldthat the water rights owner as a transferor transfers waterinsist that the nation should have the ownership of waterusufruct at the first time to the water applicant as a trans-resources on premise and enhance public water rights' ex-feree. Generally speaking, to areas where the water rightsclusivity, separating water resources' usufruct, managementregistration function is complete, they just need to re-reg-rights, income rights, benefits of cession and other relevantistrate and confirm new water rights and trading conditions;rights properly.to current regitation which incudes repeating water rights3.1 Carifying water rights connotationareas where the amount of water rights has surpassed thesum of available water amount, the best method is re-dis-According to the bounds of water rights, the key issue istribute the water amount according to the previous waterclear and definite. Without the clear bounds of water rights, using amount; to the abuse of water rights areas, the possi-water rights trade could not be operated. Clear and specificble method is setting suitable limitations to the amount ofproperty rights mean that all functional rights and the risk the use of water according to irigation areas.responsibilities' main body of property is clear, and dfer-ent economic parties know exactly about the bounds of3.3 Promote water rights tradetheir specific property rights; thus distribution, usufruct,Once initial water rights distribution had been com-income distribution and responsibiliticis have all clearly pleted, the govermment should collocate resource domainsbeen fulfilled by the economic parties themselves. Onceand then efectively play govenmental functions to man-the proper right has been bounded, no matter how the ini- age water incidents. Water rights should be used as a rela-tial right was distributed, there would be no influence ontive kind of private property and freely traded in the market;economic eficiency. But clear property rights require costs. thus we should get over limitations of public property maxi-The level of water rights needs to match certain social con-mally and intemalize its extermal characterstics maximum.ditions, and certain degree of the ilgibility of property Although the implementation of initial water rights distri-中国煤化工YHCNMHG34 Chinese Joumal of Population, Reources and Eoviroment 2008 Vvol.6 No.2bution does not mean the entry ownership, in the opinionwater grows up.of stting up rights' technical layout in order to sufficientlyFourth, we should solve the problem of the lack of en-actualize maximum water resource's worth, water rightsvironmental water. Under the condition that the govern-should have exclusivity and negotiability.ment directly distributes water resources, if there are someFirst of all, we should enhance the exclusivity of trad-problems appearing like the shortage of reserved waterable water rights. When initial water rights had been de-resources which could not satisfy environmental needs, etc,fined, laws should be used to protect its stability, extermnalwhat the govemment needs to do is just reducing the sup-performance caused by the instability of initial rightsply of water resources for other purposes. Nevertheless,should be got rid of and public rights should not influencewhen water resource distribution is marketlized, the previ-water rights improperly.ous method the govemment used has deprived water rightSecond, we should cancel the restriction of water rightsowners of water right licensing that falls short of markettransfer. Forbidding future usufructs of water trade is mainlyvalue discipline. A valid approach is that the govermmentinfluenced by encouraging non-business usufructs and usageuses two different types of methods in order to make partfor rights opinion but not for satisfying needs (Posner andof water rights owners quit of the water market. The firstJiang, 1997). Because the Chinese govemment implementsone is that the govermment buys out part of water rights'loosing water rights without using them' regulation, savinglicensing from users; the second one is that the govemmentwater resources could not bring any realistic benefits to theimplements the percentage method of water rights licens-owner of water right. Moreover, if there are some ways toing shares. Through this way, it does not act against marketrestrict the use of water resource, their quotas would be re-commutative rules, and it could satisfy changeable envi-duced consequently, and this type of restriction blew savingroumental water demands.ways seriously. Hence, for the sake of promoting waterrights to the market, users should be alowed to sell the savedReferenceswater to gain worth from them; this could encourage peopleto pay more atention to the rare worth of water resources;Cooter R and Ulen T, 2002. Law and Economics. Shanghai Fi-transferring water resources from free goods to wealthynance and Economics University Publisher, 46goods encourages saving water resources and makes it flowDaly H E and Townsend K N, 2001. Valuing the Earth. Commer-to the purpose of enhancing the using value.cial PressThird, we should implement a pricing system gradually.Guang Ming Daily, May 16", 2001. Analysis on China waterChinese laws prescribe the implementation metrology forresources allotment system reform from the water right bar-water using and an over standard price increasing system isgain between Dong Yang and Yi Wuin progress, however, regulated public water supply com-North D C, 1991. The Structure and the Change in the Economicpanies are only permitted to charge certain amount whichHistory. Sanlian Bookstores in Shanghai, 20matches their cost. The pricing level is a lttle bit low andPermnan R, Hou Y z, et al, 2002. Natural Resources and Environ-the rate does not reflect different types of costs of customerment Economics. Chinese Economic Publisher, 155services. Efficient pricing requires using marginal costPosner R A and Jiang Z K, 1997. Economic Analysis of Law.rather than average cost, in order to keep sufficient savingChina Big Encyclopedia Publisher, 20: 42during usage; consumers must pay the cost of supplyingSpulber D F and Hui Y et al, 1999. Control and Market. Sanlianthe marginal cost of the last unit of water (Tietenberg andBookstores in Shanghai, 36Yan, 2003). The metrology system takes care of both re Tietenberg T and Yan X Y, 2003. Environmental and Naturalquired earning yield and improved saving of water re-Resource Economics. Economic Science Publisher, 211sources. At this type of price stting system along with theXiao G X and Xiao Q G, 1999. Natural Resources Law. Lawrising of consuming amount, the price of each unit ofPublisher, 92中国煤化工MHCNMHG