The impact of water rights reform on economic development: Evidence from city-level panel data in China

The water rights reform (WRR) is an important way to achieve market-oriented allocation of water resources. This article uses city-level panel data to analyze the economic effects of WRR in China. The results show that the WRR can increase overall value added by 4.40%. However, the average impact of WRR on agricultural value added is not significant, but it can significantly increase non-agricultural value added by 3.83%. Heterogeneity analysis shows that the WRR in cities with water rights conversion experience or in provincial capital or sub- provincial cities will have a smaller promotion effect on the overall economy than in other cities; in places with lower total water resources, the WRR will have a greater promoting effect on the overall economy. In areas where the total amount of water resources or sown area is small, the WRR can also promote the added value of agriculture. Cities participating in water rights conversion will achieve lower non-agricultural economic effects after the WRR, but in areas with higher population density, the non-agricultural economic effects the WRR can achieve will be greater. Further analysis shows that the WRR can promote the increase in the proportion of nonagricultural value added, and the increase in non-agricultural value added mainly comes from the industrial sector. Furthermore, the WRR does not threaten food security.