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Incentives in water management reform: assessing the effect on water use, production, and poverty in the Yellow River Basin

Published online by Cambridge University Press:  21 November 2005

JINXIA WANG
Affiliation:
Institute of Geographical Sciences and Natural Resource Research, Chinese Academy of Sciences, Beijing, China.
ZHIGANG XU
Affiliation:
Institute of Geographical Sciences and Natural Resource Research, Chinese Academy of Sciences, Beijing, China.
JIKUN HUANG
Affiliation:
Institute of Geographical Sciences and Natural Resource Research, Chinese Academy of Sciences, Beijing, China.
SCOTT ROZELLE
Affiliation:
Department of Agricultural and Resource Economics, University of California, Davis.

Abstract

The overall goal of our paper is to better understand water management reform in China's rural communities, especially focusing on the effect that improving incentives to water managers will have on the nation's water resources and the welfare of the rural population. To pursue this goal, the paper has three objectives. First, we track the evolution of water management reform and seek to identify the incentive mechanisms that encourage water managers to more efficiently use water. Second, we identify the impact on crop water use of the incentives provided to water managers during reform. Since we are also interested in the possible negative consequences of an incentive-led water management reform strategy, the paper also explores how changes in incentives also affect agricultural production, farmer income, and poverty. Based on a random sample of 51 villages, 189 farmers, and 378 plots in four large irrigation districts in Ningxia and Henan provinces, both provinces in China's Yellow River Basin, our results show that in our sample areas the two main forms of water management reform, Water User Associations and contracting, have begun to systematically replace traditional forms of collective management. Our analysis demonstrates, however, that it is not the nominal implementation of the reform that matters, but rather it is the creation of new management institutions that offer water managers monetary incentives that lead to water savings. Importantly, given China's concerns about national food production and poverty alleviation, the reductions in water, at least in our sample sites, do not lead to reductions in either production or income, and do not increase the incidence of poverty.

Type
Research Article
Copyright
2005 Cambridge University Press

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Footnotes

The authors would like to thank David Dawe, Richard E. Howitt, Qiuqiong Huang, Bryan Lohmar, Siwa Msangi and Jame Wellen for their insights and helpful suggestions. A special thanks is given to Intizar Hussain and Eric Biltonen, our colleagues from the International Water Management Institute (IWMI) that led the project under which our research was conducted. We also thank two anonymous referees for helpful comments. We acknowledge the financial support from the National Natural Sciences Foundation (70003011 and 70021001) in China, IWMI, the Asian Development Bank and EU-INCO, IC4-CT-2001-10085. We also acknowledge the USDA's NRI research grants program and the Ford Foundation, Beijing and the International Rice Research Institute for supplemental support of this project. Scott Rozelle is a member of Giannini Foundation.
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