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Reducing agricultural water use is an inevitable choice to alleviate water shortage in arid and semi-arid regions, and high-efficiency irrigation technologies provide conditions for water conservation. However, without unified water resources management policy to redistribute the saved agricultural water, farmers’ behavior will lead to water rebound and large-scale expansion of cultivated areas, especially on the edge of oasis regions. To solve these issues and promote the sustainable development of water resources, it makes sense to explore the impact of unified water resources management policy from the perspective of farmers’ behavior. This study takes the typical irrigation zone in the Heihe River Basin as a case to discuss the response of farmers’ economic behavior to transferring irrigation water and restricting land reclamation, i.e., the unified water resources management policy with the technical efficiency of crop irrigation improved based on the bio-economic model. The results show that in the case of loosening land constraints, farmers will reuse all the saved water for agricultural production by reclaiming unused land or increasing the area of water-intensive crops (vegetables). Although the policy of restricting land reclamation can restrict land expansion, it cannot avoid water rebound caused by adjusting the crop-planting structure. Farmers’ land-expansion behavior can be largely restricted by transferring the saved irrigation water to non-agricultural sectors in irrigation zones with inadequate water, but to contain land-expansion behavior in irrigation zones with surplus water, the policy of restricting land reclamation must be implemented simultaneously. The study also reveals that farmers will choose to grow more cash crops (seed maize, vegetables, tomato, seed watermelon, potato, and rapeseed) and fewer food crops (wheat, maize) to increase the profit per unit of water in the scenario of loosening land constraints or transferring agricultural water. Furthermore, the study indicates that farmers’ economic income can be decreased or at least not increased with the transfer of agricultural water. Both benefit compensation from non-agricultural sectors and increased non-agricultural income can compensate farmers’ economic loss. Therefore, it is necessary to improve water rights trading systems and increase employment opportunities for surplus agricultural labor to promote economic development in rural areas.

How Do Farmers Respond to Water Resources Management Policy in the Heihe River Basin of China?