Can agricultural water rights trading promote intensive and economical utilization of water resources in China based on the difference-in-differences model?

Introduction Improving the level of intensive and economical utilization of water resources is an important step towards water and food security. Methods Based on China’s provincial panel data from 2015 to 2021, this study uses a difference-in-differences (DID) model to examine the effect of agricultural water rights trading on intensive and economical utilization of water resources. Results The results show that agricultural water rights trading can significantly promote an intensive and economical utilization of water resources at the 1% level, and the results remain valid even after a series of robustness tests. Further analysis indicates that agricultural water rights trading can promote better utilization of water resources by significantly reducing agricultural water consumption at the 1% level and reducing the proportion of agricultural water consumption at the 5% level to optimize water use structure. Moreover, in regions with scarce water resources, strong water resource constraints, more farmland water conservancy projects, and greater economic development, the promoting effect of agricultural water rights trading on the intensive and economical use of water resources is more significant. Discussion This study provides evidence of the impact of China’s agricultural water rights trading policy and offers new ideas and experiences to improve China’s water resource utilization efficiency. The contributions of this work are mainly threefold. First, this paper clearly distinguishes the intensive conservation of water resources, presents an evaluation index system, and complements the existing literature on measuring the intensive and economical utilization of water resources. Second, the path of agricultural water rights trading is analyzed to improve the level of intensive and economical utilization of water resources, thus enriching related research on transmission mechanisms. Third, the heterogeneity of the influence of different regional conditions on the level of intensive and economical utilization of water resources is discussed to improve relevant policies.