The Living Water of Policies: How Can Water Rights Trading Pilots Promote the Net Carbon Sink Intensity of the Planting Industry

Water rights trading policies play a crucial role in optimizing water resource allocation, improving agricultural water use efficiency, and promoting the sustainability of both agriculture and the environment, while also providing strong support for achieving the ‘dual-carbon’ goals. Utilizing data from 291 prefecture-level cities between 2009 and 2023, this research applies the PSM-DID model to examine how the water rights trading policy affects the net carbon sink intensity in the planting sector. The findings are as follows: First, the water rights trading policy can significantly enhance the net carbon sink intensity of the planting industry, with an average increase of 1.110 tons per hectare. Second, the mediating effect model is employed to test the underlying mechanism. The results show that the water rights trading policy can play a role through two paths: reducing the proportion of food crop planting and reducing the use of fertilizer. Third, heterogeneity analysis is conducted using subgroup regression. The heterogeneity analysis reveals that the policy’s impact is more pronounced in cities characterized by abundant water resources, higher farmer incomes, and those situated in Eastern China. Fourth, a spatial-effect analysis is performed with the spatial Durbin model. The results further reveal that the policy not only directly enhances the net carbon sink intensity in the planting industry but also generates significant spatial spillover effects. In the future, efforts should focus on enhancing the market structure for water rights trading and reinforcing region-specific implementation strategies, guiding the green optimization of the planting structure, preventing the rebound effect of water conservation, and emphasizing the role of spatial linkage to create a new model of regionally coordinated low-carbon development in agriculture.