Assessing the impact of water price reform on farmers’ willingness to pay for agricultural water in northwest China

Abstract

A water price increase has been used as an effective method to guarantee national water security and maintain national food security in China. The reasonableness of the water price has a direct influence on people's attitude, behavioural decision regarding willingness to pay, and motivation for water conservation. A double-bounded dichotomous choice contingent valuation method was used to assess the impact of integrated agricultural water price reform on farmers' willingness to pay for irrigation water in northwest China. The estimated mean willingness to pay in the study area was 0.144 RMB/m3. A comparison showed that higher education and longer experience in farming were likely to result in a higher willingness to pay in the study area. Participants who had a higher awareness of water price reform showed a higher likelihood of agreeing to higher bidding. Those who thought the current water price was lower had a higher willingness to pay for irrigation water. Participants who considered agricultural water resources to be scarce in the area also had a higher willingness to pay. In contrast, the bidding variables were negative and significant at the 1% level, showing that participants were more inclined to reject a higher bid. Meanwhile, the older the participant, the less they were willing to pay. An unintended finding was that participants' willingness to pay decreased if they chose to use water-saving technology. One possible explanation was that the investment in the construction of the infrastructure (such as pipes and pumps) may have exacerbated farmers' burden and may not have resulted in any benefits to them. Based on the results of this paper, a related optimization policy was presented for water price reform.