ABSTRACT
ABSTRACT: Although increasing attention is being paid in the literature to document the rise of groundwater markets and understand where and in what conditions they emerge, little empirical work has been done to measure the impact that groundwater markets have on irrigation water use, crop yields and farmer income. This is surprising given the potential effects-both positive and negative-that groundwater markets might be expected to have on the production and welfare of farm households. Based on a survey of 46 randomly sampled villages and 173 households in two provinces (Hebei and Henan Province) in 2001 and 2004, farmers buying irrigation water through groundwater markets significantly reduce water use compared with farmers who have their own tubewells. Little effect, however, is found on agricultural productivity or yields. Findings also demonstrate that groundwater markets in the North China Plain do not have a negative effect on income.
