Analysis on the Relationship Between the Virtual Water and Economic Development
in Beijing-Tianjin-Hebei Region
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Liu Ning1 2; Yan Jingjing1 2; Sha Jinghua1 2; Zhang Hongliang1 3; Zhong Shuai4
1.School of Humanities and Economic Management, China University of Geosciences, Beijing ,100083, China;
2.Key Laboratory of Carrying Capacity Assesssment for Resource and Environment, Ministry of Land &Resources, Beijing
100083,China
3.School of Economics and Management, Southwest University of Science and Technology, Chongqing, 621000,China
4. Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing 100101, China
Abstract: Water shortage and irrational allocation have restricted the economic and social development of
Beijing-Tianjin-Hebei region. 70 percent of water is used for agriculture, while virtual water of agriculture come up to 1854×108m3 which is ten times of the annual water consumption of this area. According to the principle of saving and optimal
allocation, the research analyzing the effect of main agricultural products to economic growth, based on calculating ten kindsof virtual water of main agricultural products. The method is fixed effects regression model. The conclusion is as follows:
Three products of milk, vegetables, dry and fresh fruit are suitable for production in Beijing-Tianjin-Hebei region because of
a positive role in development of per capita GDP and low virtual water content; Three products of grain crops, meat andpoultry eggs are not suitable for production in Beijing-Tianjin-Hebei region because of a negative role in development of percapita GDP and high virtual water content, while a limited amount of grain crops, meat and poultry eggs should be imported
to guarantee the regional strategic security; Forest products play an important role in environmental protection and should
offer subsidy to producer in spite of a negative role and high virtual water content; cotton belongs to government subsidies
product and Oil products and aquatic products could be imported completely.
Key words: Beijing-Tianjin-Hebei Region, virtual water, plantation structure, fixed-effect model
1 Introduction
Beijing-Tianjin-Hebei region is an urban agglomeration area composed of Beijing, Tianjin and Hebei province. The area of
this region reaches 216 thousand square kilometers and the population reaches 100 million. Because of the regional
connection, symbiotic resources, complementary economic development and the same strain of water resources, thecoordinated development of Beijing-Tianjin-Hebei region outline is just enacted in 2015. The aim of outline is to change theimbalance of regional development and resource allocation, to promote the coordinated development of economy, society andresources. Water shortage and uneven allocation have been becoming one of the most serious problems ofBeijing-Tianjin-Hebei region. According to the statistical yearbook, water supply of Beijing-Tianjin-Hebei region was 125×108 m3 in 2013, while water demand was 255×108 m3. The demand-supply gap was 130×108 m3 and year-on-year growth of
172% in 2013. Furthermore, the average of demand-supply gap is 79×108 m3 during the last ten years. Given to the above
calculation, water shortage problem of Beijing-Tianjin-Hebei region is obvious. Agricultural water demand was 182×108 m3
which is 70% of the whole year supply, while the first industry output value accounted for 4%, Water resources allocation is
not reasonable.
According to the Water pollution control plan enacted in 2015, the district such as Hebei province where agricultural water
consumption is the major fraction of freshwater consumption should decrease planting area of water intensive crops, and savewater by adjusting the agricultural planting structure. Based on previous studies, crop water consumption not only needs toconsider the entity water, but also need to account the cost of virtual water. The term ‘virtual water’ was introduced by Tony
Allan in the early 1990s. It is defined as the volume of water required to produce agricultural products, which is extended
from the concept of embedded water[1] in 1993, then it is defined as the volume of water required to produce a commodity orservice in 1996[2]. It is from the production point of view and quantifies virtual water as the real water used in the commodity
production. To produce one liter of milk, we need about 915 liter of water, including water used directly in production andindirectly used in production. The water used directly in production includes rainfall during grass growing process (400L),
grass irrigation water (300L) and livestock drinking water (15L). The water used indirectly in production includes rainfalland irrigation water in feed production (200L). The virtual water of agricultural products in Beijing-Tianjin-Hebei region was
1854×108 m3 in 2013, which was ten times of agriculture entity water consumption. It is of great importance to control thevirtual water for saving water resources of Beijing-Tianjin-Hebei region. This research analyzes that main agricultural
products virtual water impact on regional economy, basing on accounting main agricultural products virtual water content inBeijing-Tianjin-Hebei region.
2 Review of relationship between Virtual Water and economic development
Virtual water research focused on two main themes so far. One is virtual water content calculation, the other is virtual water
trade. The relationship between virtual water and economic development is an important topic based on the virtual watercontent calculation. At the beginning, the virtual water calculation object focused on farm crops and livestock products[3-6],
that is farm crops products content, livestock products content and regional agriculture virtual water total content, whereafter,
the virtual water calculation object extended to all the commodity. Tian accounted the China's wood forest products virtualwater[7]. Economic elements, resources elements and environmental elements are very important influencing factors of virtualwater content and virtual water trade[8-11]. Resources elements such as population, plowland number and applying quantity ofchemical fertilizer have high matching rate with virtual water. Environmental elements such as soil and water loss have low
matching rate with virtual water. Economic elements such as GDP have a declining matching rate with virtual water. On thecontrary, Virtual water plays an important role on the economic development and adjustment of industrial allocation. Maksud
Bekchanov researched the role of virtual water for Uzbekistan sustainable economic restructuring by using the input-output
method, the conclusion is that developing agro-processing industries and the livestock sector rather than relying on the
production of raw agricultural commodities such as cotton, wheat, and rice provides more sustainable economic developmentin Uzbekistan[12]. Research carried on by Samir Suweis finds that virtual water controlled demographic growth andpopulation of nations [13]. Zou put forwards the regional virtual water content represents china’s agricultural industry
distribution, and optimizing the layout of agricultural production by calculate matching rate between the virtual water content
and regional economic. In conclusion, Virtual water is closely associated with regional economic development, and it isreasonable to promote agricultural planting structure and water resources allocation restructuring by measuring the main
agricultural virtual water impact on economic growth.
3 Data sources
According to China statistical yearbook classification, the main agricultural products in Beijing-Tianjin-Hebei region arefarm products, forestry products, husbandry products and fishing products. Farm products include grain (such as rice, winterwheat, corn, beans and tubers), cotton, oil plants, vegetable and fruit. Husbandry products include pork, beef, mutton, poultry
meat, egg and milk. Fishing products mainly include fresh-water fish. Forestry products include afforestation of barren hills
and culture of seedling. Given to the different planting conditions, Hebei province additionally includes millet, Chinesesorghum, tobacco and hemp.
There are two types of virtual water calculation method. One is calculation according to separate products[15], the other isaccording to different kinds of products[16]. Both of them are Life cycle calculation method and are based on thePenman-Monteith Method developed by FAO. The Penman-Monteith Method is used to calculate agricultural products
virtual water per unit mass. Main agricultural products virtual water equal to agricultural products virtual water per unit mass
multiply by agricultural products production. The data of agricultural products production is from China Statistical Yearbook(1995-2014), Beijing Statistical Yearbook (1995-2014), Tianjin Statistical Yearbook (1995-2014) and Hebei Statistical
Yearbook (1995-2014). The data of agricultural products virtual water per unit mass is from previous studies. Sun[8] andMa[18] figure out main agricultural products virtual water per unit mass of China. Hoekstra A Y[19] figure out livestock
products of China. Tian[7] figure out wood forest products virtual water. Finally, we obtain main agricultural products virtualwater per unit mass of Beijing-Tianjin-Hebei region. The data we get above is in line with the panel data form, so panel data
model is applicable.

Tab.1 Main agricultural products virtual water per unit mass of Beijing-Tianjin-Hebei region
Unit: m3/kg
industry

products

Beijing

TianjinHebei

winter wheat

1.23

1.25

1.065

rice

1.4

1.19

2.185

corn

0.84

0.85

0.817

millet

--

--

0.93

Chinese sorghum

--

--

1.343

beans

2.24

3.73

1.08

tubers

0.7

1.07

1.2

cotton

5.22

4.4

5.5

oil plants

1.5

1.5

2.2

tobacco

--

--

2.76

hemp

--

--

2.185

vegetable

0.24

0.13

0.1

fruit

0.55

1.38

1.5

pork

3.7

3.6

3.6

beef

19.99

19.99

19.99

husbandry

mutton

18.01

18.01

18.01

products

poultry meat

2.7

3.11

--

egg

8.65

8.65

8.65

milk

2.2

2.2

2.2

fresh-water fish

3.11

3.11

3.11

85865.1

85865.1

85865.1

farm products

fishing products
forestry products

afforestation（m3/hm2）

Notice: Beijing and Tianjin do not product millet, Chinese sorghum, tobacco and hemp.
4 Model construction and test
4.1 Model construction
Panel data model usually include fixed-effect model, random-effect model and mixed-effects model. The general expressions
for the three model is as follows.
lnYit = C + βit ∑lnXit(1)

Where Yit is dependent variables, this study selects GDP per capita. Xit is independent variables, these are ten agricultural
products virtual water in Beijing-Tianjin-Hebei region. “i” is sectional data，and this study include Beijing, Tianjin and Hebei.
“t” is time-series data from 1994 to 2013. C is constant. βit is regression coefficient vector.
4.2 Unit Root Test
This study adopts Madfuller test and Hadrilm test to test stationarity of time series data. ① Madfuller test:H0 is all 3 timeseries in the panel are I(1) processes，if you reject the null hypothesis that at least one sequence is smooth.② Hadrilm test:
H0 is all 3 time series in the panel are smooth, if you reject the null hypothesis that at least one sequence is not smooth.
In the Madfuller test, all the lag time series is 1. At least one sequence of X7 and X9 is smooth in original data sequence, andat least one sequence of X1, X2, X3, X5 and X6 is smooth in lag time 2. In the Hadrilm r test, at least one sequence of X1,
X2, X3, X6, X9 and X10 is not smooth in lag time 1, and at least one sequence of Y, X4, X5, X7 and X8 is not smooth in lag
time 2. Combining with two kinds of results, Time series of X1-X10 are stationary under the condition of difference order.

Tab.2 Unit root test results
Madfuller testlagdifference

Hadrilm test

critical value
MADF

difference order

stationarity

stationarity

（5%）

phase

order

Y GDP per capita

12

123.41149.619stationary

2

stationary

X1 grain

1

1

56.79745.195stationary

1stationary

X2cotton1

1

53.24945.195stationary

1stationary

X3oil plants1

1

52.65445.195stationary

1stationary

X4vegetable1

2

146.12549.619stationary

2

stationary

X5fruit1

1

48.54745.195stationary

2

stationary

X6meat1

1

78.01845.195stationary

1stationary

X7egg

1

0

88.32141.700stationary

2

stationary

X8milk1

2

71.85849.619stationary

2

stationary

X9fish1043.34841.700stationary

1stationary

X10afforestation

1

2

118.39449.619stationary

1stationary

4.3 Model test
This study adopts Wald F test, B-P test and Hausman test to distinguish the difference of fixed-effect model, random-effectmodel and mixed-effects model. ① Wald F test: H0 is it= 0, if you reject the null hypothesis that we should adopt
fixed-effect model; ② B-P test: H0 is it= 0, if you reject the null hypothesis that we should adopt random-effect model; ③Hausman test: H0 is COV（Xit，it ）=0, if you reject the null hypothesis that we should adopt fixed-effect model. According
to the test results, this study adopts the fixed-effect model to estimate the panel data.
Tab. 3 Statistical tests
test

detection value

P value

Preferred

Wald test

24.31

0.0000fixed-effect model

B-P test

894.880.0000

random-effect model

Hausman test

49.46

0.0000fixed-effect model

5 regression analysis of fixed-effect model
According to descriptive statistics, the virtual water content of egg, afforestation, grain and meat are highest, and the annual
virtual water content are more than 100 billion cubic meters. The annual virtual water content of fruit is 41 billion cubic
meters. The annual virtual water content of vegetable and milk are more than20 billion cubic meters. The annual virtual watercontent of fresh-water fish is 18 billion cubic meters. The annual virtual water content of cotton and oil plants are 18 billion
cubic meters. The distribution of ten agricultural products virtual water content reflect water resources allocation situationand crops industry layout in Beijing-Tianjin-Hebei region. Additionally, it is controversial to make water resources policy justrely on virtual water content[20], so this research also analyzes the effect of main agricultural products to economic growth as
the basis of agricultural planting restructuring.
Regression analysis shows R2 = 0.9642. All the X1- X8 are through the t value test within the 95% confidence interval. X10
passes the t value test the 90% confidence interval. X9 do not pass the t value test. In addition, that F test is significant shows
equation simulation effect is good. The regression equation we get is as follows.
𝐿𝑛𝑌 =10.9 − 0.34𝐿𝑛𝑋1 − 0.16𝐿𝑛𝑋2 − 0.76𝐿𝑛𝑋3 + 0.97𝐿𝑛𝑋4 + 0.18𝐿𝑛𝑋5 − 0.33𝐿𝑛𝑋6 − 0.39𝐿𝑛𝑋7 + 0.49𝐿𝑛𝑋8 −0.97𝐿𝑛𝑋10(2)

Tab.4 Regression result
LnY

coefficientt

P value

LnX1 grain-.3401002

2.86

0.006

LnX2 cotton-.1649759

5.43

0.000

LnX3 oil plants-.7587813

-6.70

0.000

LnX4 vegetable.9705524

3.87

0.000

LnX5 fruit.1873086

3.63

0.001

LnX6 meat-.3331573

-2.54

0.015

LnX7 egg-.3857078

-3.38

0.001

LnX8 milk.4947548

5.72

0.000

LnX9 fish-.0579694

-0.62

0.535

LnX10 afforestation-.0966898

-1.69

0.097

_cons

10.89256

13.77

0.000

2

R （within）=0.9642
F=24.31 Prob >F = 0.0000
Vegetable, milk and fruit have a positive effect on Per Capita GDP, where vegetable has the strongest positive effect, andmilk and fruit are subsequent. Virtual water of vegetable each additional unit, the per capita GDP growth rate was 97%.
Virtual water of milk and fruit each additional unit, the per capita GDP growth rate was 49% and 18% separately. Grain,
cotton, oil plants, meat, egg and afforestation have a negative effect on Per Capita GDP, where oil plants has the strongest
negative effect, and egg, grain and meat are subsequent. Virtual water of oil plants each additional unit, the per capita GDP
growth rate was -75%. Virtual water of egg, grain and meat each additional unit, the per capita GDP growth rate was -38%,-34% and -33%. Besides that, cotton and afforestation also have limited negative effect on Per Capita GDP, and virtual waterof otton and afforestation each additional unit, the per capita GDP growth rate was -16% and -9% respectively.
6 Conclusions
The present situation and restructuring direction of agricultural planting structure in Beijing-Tianjin-Hebei region is asfollows.
(1) Vegetable, milk and fruit are suitable for production in Beijing-Tianjin-Hebei region. Because of the positive effect on
Per Capita GDP and less of virtual water, three products not only is beneficial to improve the level of GDP per capita,
but also save water resources.
(2) Because of the negative effect on Per Capita GDP and cost of virtual water, three products of grain, meat and egg are notsuitable for production in Beijing-Tianjin-Hebei region. Given to be closely related to residents, three products haveimportant strategic security status. It necessary to limitedly reduce the local production and increase imports from thesurrounding area and international trade, while maintaining regional safety.
(3) Forestry products play an important role to protect the ecological environment, though it has a week negative effect on
Per Capita GDP and cost of virtual water. So the restructuring direction of forestry products is to increase subsidies forforestry industry, to increase economic forest tree planting proportion for improving the income of planter, to increase
the coniferous forest planting proportion for saving water.
(4) Cotton virtual water is less, but has a week negative effect on Per Capita GDP. So the restructuring direction of cotton isto develop cotton processing industries for increasing the income of peasants.
(5) Because of the heaviest negative effect on Per Capita GDP and be difficult to improve the economic benefit bylarge-scale production, oil plants could completely import from Shandong peninsula and Liaodong peninsula.
(6) Fishing products have no significant impact on the economy, combining with the current situation that the river is dying
up and wetland is shrinking. So the restructuring direction of fishing products is to reduce the local production andincrease imports from the surrounding area.
7 Discussions
The deficiency of the research is that suppose the Beijing-Tianjin-Hebei region as a closed system, and the focus of the next
step study is virtual water trade between internal and external of Beijing-Tianjin-Hebei region. Next study will the effect ofvirtual water trade to industrial restructuring and water resource optimize distribution.
Acknowledgement
This research was supported by the National Natural Science Foundation of China(41101559)，The Youth Social Science
Fund Project of Beijing (No. 27201417),

and Good Mentors Foundation of Ministry of Education(No.53200859439)

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