Water Policies and Farmers’ Irrigation Behavior: Evidence from Groundwater Governance Reforms in China

Groundwater overexploitation poses a major challenge to sustainable agricultural water management, yet the behavioral mechanisms through which different groundwater policies affect farmers’ irrigation decisions remain poorly understood. The objective of this study is to estimate the causal effects of two groundwater governance interventions in northern China—a water rights reform based on water-use quotas and a ban on new agricultural tubewell construction—and to identify the behavioral channels through which they operate. Using a household panel dataset from pilot areas in Hebei Province and Inner Mongolia, we combine difference-in-differences, multinomial logit, and two-stage least squares (2SLS) estimators to identify policy effects on irrigation water use, water-saving technology adoption, groundwater infrastructure, and irrigation water prices. The results reveal distinct behavioral responses to the two policies. The water rights reform reduces irrigation water use by approximately 430–563 m3 per ha across specifications, with the effect statistically significant in the pooled and village fixed-effects specifications and marginally significant with household fixed effects, but does not significantly affect the adoption of water-saving irrigation technologies. In contrast, the tubewell ban does not significantly reduce water use directly but increases farmers’ relative propensity to adopt large-sprinkler, micro-spray, and drip irrigation. The fixed-effects and 2SLS estimates further show that the tubewell ban significantly increases irrigation water prices by approximately 0.42–0.62 CNY per m3. Neither policy significantly affects village tubewell stocks. Estimates for household tubewell ownership are likewise statistically insignificant, but the weak instruments in the ownership equation preclude a definitive conclusion. Overall, the evidence points primarily to adjustments along the price and technology margins rather than village infrastructure. These findings suggest that quantity-based water rights regulation and groundwater-access restrictions operate through different behavioral channels and should be regarded as complementary instruments for agricultural groundwater conservation.