The Effects of the South‐to‐North Water Transfer Project on Agriculture in China: A Tale of Two Routes

ABSTRACT This study investigates the impacts of China's South‐to‐North Water Transfer Project (SNWTP) on agricultural production using city‐level data from 2009 to 2019. Utilizing the Synthetic Control Difference‐in‐Differences method, we find heterogeneous impacts along the eastern and middle routes of the SNWTP. The operation of the eastern route increases agricultural output by 3.7%, primarily driven by an increase in fishery and aquaculture output. In contrast, the middle route decreases agricultural output by 10.8%, mainly due to the reduction in outputs of crop cultivation and animal husbandry. This unexpected decrease in agricultural output in the water‐receiving cities along the middle route can be attributed to the stricter environmental regulations aimed at preserving the quality of the diverted water. The heterogenous effects of the SNWTP on agricultural production highlight the complex consequences of large‐scale water infrastructure projects, underscoring the importance of incorporating environmental considerations into the evaluation of such initiatives.