Effects of Permanent and Temporary Water-Right Payments on Balancing Agricultural and Ecological Interests: A Case Study of Hami Prefecture in Northwestern China

Water productivity promotion is critical for achieving a balance maintaining the livelihood of large poor agricultural population and protecting ecological water in developing countries in arid and semiarid regions, and government financial payments play a significant role in this process. According to different water rights, government financial payment can be categorized as permanent water right payment and temporary water right payment, whereas the impacts of the two policies and their interrelationship are still unclear. This study aimed to explore the impacts of the two water right payments on the balance between agricultural and ecological interests in developing countries in arid and semiarid areas. Taking the Hami Prefecture in east Xinjiang, China, as the case study area, an agent-based model was developed to simulate farmers’ decisions and agricultural and ecological results under different policy conditions. Results showed that the temporary water right payment is useful in promoting water right trade but hard to drive technology adoption individually or protect agriculture economic profit. The single permanent water right payment is better under the crop production preference and ecology preference, whereas the proper combination of the two financial payment policies could reinforce each other and cost less fiscal expenditure if the government prefers a balance between agricultural production and ecology interests.