How does the certification of water rights bring water-saving behaviors to farmers?

The market-based allocation of agricultural water resources provides a potential solution for addressing water scarcity in developing countries. The certification of water rights is fundamental to the marketization of water resources. This study focuses on the water rights certification policy implemented in Ningxia, China. We selected Zhongning County and Yuanzhou District as the experimental group and control group, respectively. By conducting a sample survey of 254 households, we obtained a two-year panel dataset (2017 and 2021). Utilizing Difference-in-Differences (DID), Propensity Score Matching DID (PSM-DID), and binary Logit regression models, we empirically examine the impact of the water rights certification policy on farmers' water-saving practices. Our findings show that the policy encouraged farmers to adopt low-water-use crops and invest in water-saving technologies, improving water efficiency. The effects were heterogeneous among different groups of farmers. Smaller-scale farmers and those with a lower proportion of income from planting were more inclined to adjust their cropping patterns, while larger-scale farmers invested more in water-saving infrastructure. Additionally, households with local officials were more responsive to the policy. This study highlights the need for clear water rights and tailored policies based on local farmer characteristics. Targeted support, like financial incentives and training, can enhance participation in water-saving practices, offering insights for improving water efficiency in developing countries. • A 2-year survey involving 254 farmers was conducted to examine the impact of water rights certification policy. • The water rights certification policy in Ningxia, China, has encouraged farmers to save water. • Small-scale and non-agrarian farmers have grown more water-saving crops after policy implementation. • Large-scale and agrarian farmers have chosen to invest in better irrigation facilities after the policy.