Compensation Mechanism Of Ecological Services And Policy Research

Based on the reviews over the practices and research development of payment for watershed environmental services (PWES) in the in the world and China, we studied on the necessity and feasibility of PWES in China, defined the concept, meaning and research scope of PWES and analyzed its applicability and development stage in China. Through the analysis and field work of the 4 different typical watersheds, and based on the analysis of PWES mechanism, criteria, drives, obstacles, etc., we provide some successful experiences and policy suggestions on establishing the framework of China's PES and on the next step of work and pilot. The conclusions and suggestions are as follows:(1) Payment for Environmental Services (PES) in China has political, social, economic, and law foundations, and it is an inevitable trend of interaction among the development of society, economy and environment. At present, PES in China has been widely carried out in the scale of nation, province, county, and village and small town; the payments are primarily implemented through fiancianl transfer of central and local government, national projects, local funds, transaction within the small watersheds, water right trade and the charge of water resource, which form the system of PWES in China(2) At the moment, the governments still plays a key role as a buyer and guider in the PWES. Because of the imperfectness of legislation, unclearness of water rights, unclear definition of the payers and payees, duties, rights and obligations in the PWES, is making it hard to determine the criteria of PWES, and also making the trade costs too high. At present, there are only pilot projects in some regions. It is just through the policy guidance and reform on managerial mechanism and institution to steer, implement and improve the PES in the key watersheds.(3)Externality theory, Value of Environmental Services, Ecological Assets and Public Goods make up of the 4 theoretical bases for PES.(4)The framework of PWES mechanism includes 6 aspects: the identification of payment scope and systematic diagnosis, the identification of payment main stakeholders and their duties, PWES principles, payment criteria and payment agreements, the means of compensation and fund collection, and the establishment of PWES mechanism.(5)The international PES includes 4 modes: Voluntary private trade, Open trade system, Public payment and Ecological label, among which market transaction becomes the main mode, oversee. In China, the watershed PES is mainly through governmental purchase, while the market plays a supplementary role, though it is also important.(6)Conclusions and experiences drawn from the analysis of Development off Site and Water Right Trade in the Jinhua River are as follows:1) There are many stakeholders, and the key stakeholders are mostly the vulnerable groups. There is need to set up a system on contact office connecting the PWES administrative organizations and different stakeholders, facilitating the participation of other stakeholders and the management of the entire watershed;2) To set up multi-channel and multi-mode payment system and special fund for PWES;3) To analyze the contributing factors of willingness to pay(WTP) and payment modes by using Ordered Probit and Binary Probit models, and the education, income and the experience in ecological disasters are highly correlated with WTP;4) The payment criteria shall take the local ability to pay into account. The PWES is feasible based on water quality and quantity, and the downstream Dongyang city shall annually pay 22.95 million Yuan (2.87 million dollars), an average of 28.33 Yuan (3.54 dollars) per capita, among which 10.75 million Yuan (1.34 million dollars) to the upstream. The loss caused by limitation of development right is the largest among the losses of PWES based on supply side. Therefore, multi-forms of payment shall be taken by the downstream to compensate the upstream;5) To set up regulatory systems on PWES tax, finance, price, policy, legitarations and so on. To regulate and foster a equitable market for water resource transaction;6) Comparing the two modes, the efficiency of WRT is higher. Hence, the establishment of the link relation and active mechanism between watershed payment and protection activities plays a key role in the formation of PWES market and in watershed protection;(7)Miyun Reservoir, as the water source of cities, is an example of PWES. The main features are that it is easy to clearly differentiate the watershed beneficial region and protective region, payment based on water quality and quantity; and there are few substitutes of ecological services. So it is easier to reach an agreement. It is the main driving force to get a win-win of economic and ecological benefits. This case explores a mode of sharing watershed construction and services between the up and down reaches. At present, it is an effective way of PWES through projects, but needs to improve the efficiency of the project and the level of the supervision;(8)Qiandao Lake is an example of PWES cross-province. At present, the payment is only taken place from Hangzhou to Chun'an County in Zhejiang Province due to the disagreement of the upstream and downstream on crossprovince payment. This cross-region PWES must have the state involved, facilitated or purchased by the state;(9)Water quality control and PWES in the Jinjiang River and Luoyangjiang River within an administrative region is also a successful case. Its success lies on that it is easy to clarify the rights and benefit between watershed beneficial region and protective region, and also easier to implement and coordinate within one administrative region. At the same time, the detailed regulations for the payments and management are established facilitated by the all level government. The compensation is paid according to the improvement of water quality, ensuring the effect of payment match the amount of payment.To sum up, PWES has been developed in different levels and regions all over China, and the payment criteria and modes vary too. However, due to the lack of PWES legation and regulations and the unclearness of water right, it is difficult to determine the payment criteria, and it can be extended throughout the country after the pilot in the areas where the condition for PWES is better.