Policies, economic incentives and the adoption of modern irrigation technology in China

Abstract

The challenges China faces in terms of water availability in the agricultural sector are exacerbated by the sector's low irrigation efficiency. To increase irrigation efficiency, promoting modern irrigation technology has been emphasized by policy makers in the country. The overall goal of this paper is to understand the effect of governmental support and economic incentives on the adoption of modern irrigation technology in China, with a focus on household-based irrigation technology and community-based irrigation technology. Based on a unique data set collected at household and village levels from seven provinces, the results indicated that household-based irrigation technology has become noticeable in almost every Chinese village. In contrast, only about half of Chinese villages have adopted community-based irrigation technology. Despite the relatively high adoption level of household-based irrigation technology at the village level, its actual adoption in crop sown areas was not high, even lower for community-based irrigation technology. The econometric analysis results revealed that governmental support instruments like subsidies and extension services policies have played an important role in promoting the adoption of modern irrigation technology. Strikingly, the present irrigation pricing policy has played a significant but contradictory role in promoting the adoption of different types of modern irrigation technology. Irrigation pricing showed a positive impact on household-based irrigation technology, and a negative impact on community-based irrigation technology, possibly related to the substitution effect that is, the higher rate of adoption of household-based irrigation technology leads to lower incentives for investment in community-based irrigation technology. The paper finally concludes and discusses some policy implications.