Alleviating water scarcity and poverty through water rights trading pilot policy: A quasi-natural experiment based approach

Water poverty is among the most significant global challenges and severely restricts the sustainable development of societies and economies, especially in the world's arid regions. Many countries have attempted to address this challenge. Market-based trading mechanisms represent an essential method of resolving the problem of water shortages and alleviating water poverty. Based on a quasi-natural experiment of water rights trading pilots in China, this study uses panel data from 31 provinces (municipalities) from 2009 to 2019 to explore the impact of water rights trading pilot policy on water poverty through a difference-in-differences (DID) model. The research results show that such policies can effectively alleviate water poverty by improving water-saving irrigation technology, promoting industrial and agricultural water trading, and optimizing the industrial structure. Additionally, dynamic effect and spatial heterogeneity analyses show that the water rights trading pilot policy have long-term effects and have a stronger mitigation effect on the western region of China compared with the central and eastern regions. Therefore, the Chinese government should not only further expand the implementation scope of these policies but also adjust measures according to local conditions to accurately and effectively implement such policies in different regions. Our study provides insights into water policies in China that can better manage natural resources and reduce water poverty in the arid areas around the world.