A Framework for Developing Water Supply Policies Appropriate for Water‐Receiving Regions Utilizing Price‐Behavior‐Benefits Nexus: Insights From China

Abstract Water diversion is critical for resolving geographical and temporal water resource imbalances and meeting regional economic and social water demands. However, an unexpected surplus of diversion water frequently results in financial challenges with loan repayment following the diversion, threatening the sustainable operation of the diversion projects. The primary cause of this phenomenon is that existing water supply policies (WSPs), including water supply system (WSS) and multi‐source water supply price (MS‐WP), no longer align with the dynamic needs of water‐receiving regions, thereby hindering efficient water resource allocation. Hence, this study develops a framework for developing WSPs appropriate for water‐receiving region utilizing price‐behavior‐benefits nexus to support evolving development goals. Firstly, the constituent elements and cost water price accounting of prevailing WSSs are emphasized for the differentiated approaches' proposal of MS‐WP within distinct WSSs. Furthermore, water price elasticity and preference calculation of multi‐source water consumption (MS‐WC) are utilized to estimate the influence of MS‐WP changes on water supply benefits (WSB). Finally, by proposing an evaluation index for the benefit synergy in the water supply process, the relationship among MS‐WP, MS‐WC and WSB are clarified to evolving development goals. Applying this framework to the water‐receiving region of the Hanjiang‐to‐Weihe Project demonstrates that the formulated WSP can increase the diversion water consumption by 48.2% and reduce local water consumption by 29.3%, while the benefits for diversion water company and local government can be increased by 55.8% and 28.9%, respectively, providing a theoretical support for scientific WSP formulation in water‐receiving regions.