Has the Water Rights Trading Policy Improved Water Resource Utilization Efficiency?

Implementing natural resource protection systems and improving regional water resource utilization efficiency are effective ways to resolve the contradiction between economic development and water resource poverty. To this end, this paper establishes a Difference-in-Difference (DID) model to analyze the impact of water rights trading pilot policies (WET) in 271 prefecture-level cities in China from 2006 to 2023 on water resource utilization efficiency (WEE). The research results indicate that (1) WET significantly improved WEE, while confirming the robustness of this effect; (2) WET exhibit significant heterogeneity in their policy effects on WEE, reflecting pronounced differences between northern and southern cities in terms of geographical location and water resource endowment. In cities with abundant water resources, this promotional effect is even more pronounced; (3) market vitality and water conservation benefits can positively promote the impact of WET through regulatory mechanisms. Based on this, expanding the pilot cities for water rights trading policies and enhancing market vitality can effectively improve WEE and alleviate the current situation of water resource poverty in the region.