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Assessment of Water Rights and Irrigation Pricing Reforms in Heihe River Basin in China

The purpose of this paper is to understand the progress of water rights and irrigation pricing reform in Heihe River Basin (HRB) and their influence on irrigation application. The data came from a village and household level survey conducted in 2009 and 2014 in five counties in Zhangye City, HRB. The main component of reforming water rights was issuing water certificates to individual farmers. However, the share of villages that have done so dropped from 70% in 2004 to 28% in 2014. Water pricing reform raised the price of water. For the pricing of surface water, which consists of an area-based fee and a volumetric price, the volumetric price was increased. Econometric results show that amending water rights substantially reduced irrigation application in the early stage of reform (by 2009) but not in the later phase (by 2014). In contrast, higher water prices lowered irrigation applications significantly at both the early and later stages. Further analysis indicates that due to ineffective implementation, high cost of implementation due to large number of farmers, variations in water supply from year to year, and small farm sizes, little benefit is gained from trading. All of these factors played a role in the failure of water rights reforms.