A Factor Decomposing Model of Water Use Efficiency at Sector Level and Its Application in Beijing

The paper explores the contribution of different factors affecting water use efficiency (WUE) of each sector and explores ways to improve WUE. A new Multi-Sector and Multi-Factors Logarithmic Mean Divisia Index (MLMDI) decomposition method was developed that enabled the identification of WUE by sector into 11 factors in terms of their order of importance. An application to Beijing at the 19 sector level was made for the period between 2002–2007. The water conservation effects of six measures proposed during the 12th-Five-Year-Plan of Beijing were assessed. It was found that, to decrease the transferred out and export of agriculture products and increasing water prices would be the top two most effective measures to promote water conservation. While the adjustment of direct water use structure would contribute in less significant way, the adjustment of industrial structure would have a negative effect.