New quality productive forces in water conservancy are the core driving forces for the transformation and upgrading of the water conservancy industry and the modernization of agriculture. Based on the connotation and composition of new quality productive forces in water conservancy, this paper constructs a theoretical analytical framework for the impact of agricultural water rights trading policy on new quality productive forces in water conservancy. Using the provincial panel data in China from 2010 to 2023, this paper measures the new quality productive forces in water conservancy in each province, and uses the multi-period difference-in-differences (DID) model to analyze the impact of agricultural water rights trading policy on the new quality productive forces in water conservancy. The results show that agricultural water rights trading can significantly improve regional new quality productive forces in water conservancy. The policy effects are more pronounced in regions with significant geographical location advantages, a high level of agricultural development, and those listed as a national pilot for water rights trading. Agricultural water rights trading promotes the formation and upgrading of the “new” objects of labor, the “new” means of labor, and the “new” laborers through three pathways: property rights incentive and market synergy, water conservancy technology and equipment upgrading, and human capital deepening, thereby systematically advancing the development of new quality productive forces in water conservancy.