Reducing water poverty through institutional innovation: evidence from China's River Chief System

ABSTRACT China has implemented the most comprehensive River Chief System (RCS) globally to enhance water quality, yet its impact on water poverty and economics remains insufficiently understood. This study investigated the effect of the RCS on water poverty in China via a difference-in-differences model based on data from 31 provinces spanning the period from 2007 to 2021. The results revealed that the RCS led to a 1.69% reduction in water poverty, with technological innovation and strengthened environmental regulation identified as key mechanisms. Heterogeneity analysis showed that the RCS had a significantly stronger effect on water poverty in provinces that adopted it before 2016 and in regions with inadequate water infrastructure, with results significant at the 1% level. The cost–benefit analysis further demonstrated that the RCS had generated an economic benefit of 562.9 billion yuan, approximately equivalent to USD 84.77 billion. This paper underscores the significance of RCS policies and offers insights for refining policy optimization aimed at enhancing the sustainable management of water resources.