The Yellow River, as China's Mother River, plays an irreplaceable role in ensuring regional socio-economic development and maintaining ecological balance. However, the basin faces a fundamental challenge of limited total water resources. Its per capita water availability is only 27% of the national average, with a highly uneven spatiotemporal distribution. Furthermore, imbalanced socio-economic development across the provinces and regions within the basin has led to significant disparities between water resource and socioeconomic.
"Yellow River Water Allocation Scheme" was ratified in 1987, allocating initial water rights to different provinces and regions. Currently, it has become difficult to re-adjust these initial water rights among provinces through administrative means alone. In this context, inter-provincial water rights trading has emerged in the Yellow River Basin as an important market-based mechanism to optimize water resource allocation.
A landmark transaction occurred in 2023—the Sichuan-Ningxia inter-provincial water rights trading. This pioneering initiative established the first-of-its-kind precedent for interprovincial water rights trading in the Yellow River Basin, providing a successful model for the nation to tackle water scarcity challenges. Nevertheless, inter-provincial water rights trading is still in its nascent stages. The institutional framework remains underdeveloped, and critical issues such as trading pricing, trading duration, tradable water volume, and the ecological impacts on in-stream flows require further in-depth research.