The Compensation Mechanism and Water Quality Impacts of Agriculture-Urban Water Transfers: A Case Study in China’s Chaobai Watershed

Water transfer from agriculture to urban uses will likely become increasingly common worldwide. The objectives of this study were to evaluate the effects of converting paddy rice to dry land crops (PPRDC) on local farmers’ income in China’s Chaobai watershed and to analyze the responses of surface water quality to the change in cropping system. An on‐site investigation of 485 households and water quality data from 1999 to 2008 are presented in this study. The cost of cultivation as a percentage of the total revenue was 22.3 % for rice and 30.1 % for corn, and the calculated compensation level (CCOM) should be 6172.3 Yuan ha⁻¹. PPRDC provided farms with stable income without regard to drought and flood: thus, farmers responded positively to PPRDC, and 76.7 % of farmers expected to continue PPRDC. Inflow water quality was improved in terms of total nitrogen (TN) and nitrate (NO3–N) because of the reduction in fertilizer and pesticides after PPRDC, but there was no significant change in total phosphorus (TP). PPRDC not only reallocates water resource to different users but also improves water quality through crop adjustment. A dynamic compensation mechanism based on changing crop price is required for the future water transfer project.