Water has become increasingly scarce in northwestern China due to climate change, economic growth and burgeoning population. Improving agriculture water use efficiency is of strategic significance in promoting socio-economic water productivity for arid and semi-arid inland river basins. Based on the household-level data collected in Zhangye City, which is located in the middle reaches of Heihe River Basin (HRB) in northwestern China, irrigation water use efficiency (IWUE) of maize is estimated based on stochastic frontier analysis. The impacts of influential factors, especially the participatory irrigation management (PIM) through water user associations (WUAs), on IWUE were further examined. Results show that the estimated average Technical efficiency (TE) and IWUE of maize production are 0.74 and 0.24, respectively. The participation level in irrigation management is very low, with only 40% of the respondents participating in WUA meetings. In addition, most have a relatively superficial understanding of the roles and management scheme of WUAs. Empirical results show that though significantly positive, the magnitude of the impact of PIM on IWUE is relatively small. Households that participated in WUA meetings achieved only 0.002% higher IWUEs than those have never participated in. WUAs are not operating with their designed objectives. Consequently, reform of the traditional management form of WUAs to make them more transparent, fair, and extensively participated in among farmers is in urgently need. In addition, we also find that water price, source of irrigation water, irrigation technology adoption and famers’ education level and farming experience also have significant positive impacts on IWUE.

Water scarcity in arid regions can be addressed by using the virtual water concept in water resources management. This research used a compiled county-level input–output table to analyze virtual water flows for the Heihe River Basin in 2012 by applying a multi-regional input–output (MRIO) model. The results showed that the Heihe River Basin is a net virtual water exporter at a scale of 1.05 billion m³, which accounts for one third of the total amount of the basin’s water resources. The midstream area of the basin imports 96.31% of virtual water (2.04 billion m³) and exports 88.84% of virtual water (0.94 billion m³). In contrast, the upstream and downstream parts have limited virtual water flows. The agricultural sector largely consumes water in each county; maize or wheat production accounts for approximately 50% of the total water consumption. For most sectors, the virtual water content from surface water is greater than that from groundwater. The ratio of virtual surface water to virtual groundwater ranges from 1.20 to 2.91. The results for the water stress index indicated that most counties experienced water stress due to maize production. Greater attention needs to be paid to the adaptation and assessment of virtual water strategies in arid regions.