Agricultural water markets in China: A case study of Zhangye City in Gansu province

Irrigation agriculture in China is of critical importance to national food security. Over 70 per cent of China’s staple crops, around 80 per cent of cash crops, and 90 per cent of vegetables are produced by irrigated agriculture (Wang et al., 2017). The rapid expansion of irrigation during the twentieth century has also seen a serious degradation of the ecological environment(Sun et al., 2016). Compounding the sharp increase in demand for water is the limited and continuous reduction in water supply, which has led to a shortage of agricultural water resources, particularly in northern China (Wang et al., 2017). In response, the Chinese government at various levels has implemented a number of policy initiatives to improve water efficiency, reduce overall agricultural water use, and reallocate water between agricultural areas (Wang et al., 2019b). The Chinese government has joined a global trend towards the adoption of market-based mechanisms in order to address water scarcity (Moore, 2014).