Xuexi Huo
College of Economics and Management, Northwest A&F University

The scarcity of water resource requires China to develop water-saving agriculture, and the application of water-saving technique (WST) among farmers links to the effect of China water-efficient agriculture strategy. Because the cost of changing traditional irrigation system characterized by flooding irrigation into water-efficient system exceeds the farmers’ rational paying capacity, which means scant demand caused to WST supply is inefficient. Therefore, the government must intervene. The government intervenes become inevitable. In theory, enforcement and subsidy, both of these two main measures that the government intervenes are available to optimize allocation of water resources. However, the former is infeasible in practice in practice, at the cost of farmers’ welfare decrease. The purpose of this paper is to examine the minimum subsidy standard to encourage farmers employ WST effectively, given social welfare maximization， model the willingness to pay (WTP) of the government and the willingness to accept compensation (WAC) of the farmers for the WST and solves the interval of the subsidy of WST in a Pareto superior way. This paper also discusses the farmers’ preference to the WST under different subsidy level based on Multiple Bounded Dichotomous Choice and the data of 296 Greenhouse vegetable producers from Xi’an, Xianyang, Yangling, and Baoji in Guanzhong irrigation area, and formulates the farmers’ equal utility point under different irrigation technique conditions on the basis of Hicks Equal Variation, and confirms the minimum subsidy standard which satisfies farmers’ WAC by Welfare measurement method.
Key Words: Subsidy standard; Water-saving Irrigation; Willingness to Accept Compensation; Farmer