An economic valuation of groundwater management for Agriculture in Luancheng county, North China

•Distinguish infrastructure price, resource price and environment price based on the nature of irrigation groundwater.•Classify water into total extracted, actual consumption and over-exploited water based on the hydrological cycle of farmlands.•Analysis the value of underground water used for irrigation with developed the economic assessment model in actual, equilibrium, maximum water irrigation scenarios.•Equilibrium irrigation was the most suitable scenario based on the consumption water price for one yuan grain and the net benefits. The North China Plain (NCP) is one of the most productive and intensively cultivated agricultural regions in China but it experiences severe water shortages; thus field irrigation relies heavily on groundwater. The extraction of groundwater for irrigation has sustained increased grain yield, although the value of the irrigation water has not been estimated. Here, we propose an evaluation model for underground water used for irrigation, which took into account the infrastructure price, resource price and environment price based on monetary values. We classified underground water into total extracted, actual consumption and over-exploited water according to the hydrological cycle. We then performed a benefit-cost analysis of three underground water irrigation scenarios—actual irrigation, equilibrium irrigation and maximum water productivity (WP) irrigation—using the proposed model and Luancheng County of NCP as a case study. The results showed that (1) the volume of irrigation water varied in the order of actual irrigation scenario>equilibrium irrigation scenario>maximum WP irrigation scenario. The amount of different components of water—extracted groundwater, actually consumed groundwater and over-exploited groundwater- varied similarly, although the yearly variations in extracted groundwater were smaller; (2) the total water price should include the infrastructure price, resource price and environment price, although farmers merely pay for the infrastructure price; the resource price constituted the largest proportion of the total water price, especially in the dry years; (3) equilibrium irrigation was the most suitable scenario based on net benefits by our valuation method of underground irrigation water.