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Analyzing the farmer’s behavior and the water-saving incentive mechanism is of great significance to the implementation of the explicit subsidy policy of agricultural water prices. This paper introduces the concept of loss aversion from behavioral economics and conducts a theoretical analysis of the incentive mechanism of agricultural water prices to verify the hypotheses by using survey data from the three inland river basins in the Hexi Corridor, Northwest China. The results show that when farmers believe that their water-saving potential is relatively large, the loss aversion of farmers has a significantly positive impact on water-saving incentives under an explicit agricultural water price subsidy. In addition, irrigation canal evaluation and regional differences have negative and positive influences, respectively. Based on this, suggestions are made to actively promote the implementation of explicit subsidy of agricultural water prices in order to save irrigation water.

Analysis on the Influencing Factors of Farmers’ Cognition on the Function of Agricultural Water Price—Taking Hexi Corridor as an Example