Abstract

This article employs the case of China to address debates concerning the proper design and implementation of Water Rights Trading (WRT), and its applicability in developing countries.  The article relies on key-informant interviews and Chinese-language sources to explain why WRT in China has so far been confined to pilot and model projects.  These sources are used to identify three distinctive features of water resource management in China which constrain the applicability of market-based responses to water scarcity: a legacy of administrative control, agricultural structure and the salience of peasant political interests, and conflicts between central and local levels of government.  Because of these constraints, the article argues that market mechanisms are likely to play only a partial role in meeting China’s water resource challenges.  Scholars interested in the development of water markets should pay greater attention to such fundamental features of governance and water resource management, and the prospect of integrating market mechanisms with administrative and supply-augmentation approaches.