Abstract
Using the panel data of 30 provinces in China from 1998 to 2017, we adopt a time-varying difference-in-differences (time-varying DID) model to estimate the impact of water rights trading scheme on regional water consumption. The results show that water rights trading can significantly promote water conservation in the pilot regions by 3.1% compared to that in the non-pilot regions, and a series of robustness tests show consistent results. Policy effects are mainly driven by improving water-use efficiency and adjusting water structure; that is, by transferring water resources from the agricultural sector to the other sectors, agricultural water efficiency is improved and water conflict among sectors is alleviated; thus, water saving is achieved. In addition, by constructing two indexes of regional water pressure and tradable water resources, our heterogeneity analysis shows that water rights trading performs better in areas with high water pressure and large tradable water resources. Under the high pressure of large water use and low water endowment, water rights trading will evidently reduce water consumption more so than in the low-pressure regions, and with water rights trading, it is hard to achieve a policy effect in regions without sufficient tradable water resources. This paper provides important policy implications for China for further promoting the water rights trading scheme in the field of resource conservation.
Highlights
Water is a scarce and irreplaceable natural resource
The results show that water rights trading can significantly promote water saving in the pilot regions by 3.1% compared to that in non-pilot regions, and a series of robustness tests show consistent results
Policy effects are mainly driven by improving water-use efficiency and adjusting water structure; that is, by transferring water resources from the agricultural sector to other sectors, agricultural water efficiency is improved and water conflict among sectors is alleviated; water saving is achieved
Summary
Water is a scarce and irreplaceable natural resource. China has a shortage of water resources; water resources per capita were 2354.92 m3 in 2016, being only one fourth of the world’s average level. In the pursuit of new-normal development in China, it is important to promote the reasonable conservation and recycling of water resources. According to the Interim Measures for the Administration of Water Rights Trading issued by the Ministry of Water Resources (2016) in China, water rights trading refers to water rights transferred among regions, basins, sectors and water-user associations driven by the market, on the basis of the reasonable definition and allocation of water rights. Regional water rights trading generally occurs between administrative regions in the same basin or within an inter-basin transfer project. Inter-sector water rights trading always take place between agriculture and industry. Irrigation water users’ water rights trading only happens in irrigation areas or organizations in the agricultural sector
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