A Study on the Economic Effects of Agricultural Water Conservation Based on a CGE Model—A Case Study of the Ningxia Hui Autonomous Region

Water conservation in agriculture is one of the key measures for alleviating the imbalance between water supply and demand, and a comprehensive assessment of the economic effects of agricultural water conservation is crucial for advancing the implementation of water conservation policies. Based on a traditional CGE model, this study incorporates “water resources” as an intermediate input and couples it with a mathematical model of water conservation costs to accurately reflect the relationship between the physical quantity of water resources and their economic value. The study establishes eight water conservation scenarios to simulate the impact of varying levels of water conservation on macroeconomic aggregates, water savings, and water conservation costs, and analyzes the marginal costs and marginal benefits under different conservation intensities. The results indicate that agricultural water saving can significantly improve economic water-use efficiency and drive macroeconomic growth through industrial linkage effects; nevertheless, the scale of reallocation of water saved from agriculture to non-agricultural sectors is limited. As water-saving intensity increases, the rate of change in economic output of each sector gradually rises and then stabilizes during 2022–2030. Among all sectors, the secondary sector exhibits the largest output change rate, ranging from 0.7% to 3.0%, while the tertiary sector shows the smallest change rate, varying from 0.4% to 1.7%. Under scenarios J1–J7, the marginal cost of water saving rises from 19.2 m3 per yuan to 52.1 m3 per yuan, and the marginal output decreases from 81.1 m3 per yuan to 6.8 m3 per yuan. The pattern of marginal cost–benefit follows general economic principles. The economically reasonable water-saving threshold occurs where marginal cost equals marginal benefit, corresponding to a water-saving volume of 8.2 × 108 m3 and agricultural water withdrawal of 43.9 × 108 m3. The research findings can serve as a reference for high-quality water-saving agricultural development in irrigation districts of arid and semi-arid regions.