A Study on Developing Watershed Eco-Compensation Mechanism in China

1. A Study on Developing Watershed Eco-Compensation Mechanism: from the Perspective of Ecosystem Services— A Case Study of Guanting Reservoir Watershed in China Presenter:Wen Yihui Author of Paper：Wen Yihui, Chi Yanyan, Meng Rui, Liu Guihuan May 30th 2011 Chinese Academy for Environmental Planning

2. Contents 1. The necessity of research 2. Overview of Study Scope 3. Methods and Discussion 4.Conclusion and Perspective

3. 1. The necessity of research • Ecosystem Service: • The benefits people obtain from ecosystems • Complementary and asymmetric in spaticalarrangment • Eco-compensation: • An important instrument on fixing downstream–upstream problem of asymmetry

4. 2. Overview of Study Scope ——Guanting Reservoir Watershed • Location：Northwest to Beijing of China； • Inflows：Sanggan River, Yang River and Guishui River; • Social condition: • ever an important water source of Beijing; • 1997, forced out of drinking water supply system of Beijing, only for industrial and landscape use. • 2003, restored as a water source for agricultural, ecological and industrial use. • 2007, it restored its function as drinking water source.

5. 3. Methods and Discussion • Research Thought Changes of Watershed Ecosystem Services Watershed Eco-Compensation Mechanism Functions ofWatershed Ecosystem Services Relationship Establish watershed eco-compensation mechanism Guanting Reservoir Watershed

6. 3. Methods and Discussion • Methods • Quantifying Functions of Watershed Ecosystem Services • ① • Accounting Watershed Eco-compensation Criteria • Accounting on ecological constructions and pollution abatement cost: • In terms of the target set in diverse environmental protection plan and annual plan designed by the upstream, it is feasible to determine the annual input demand for ecological protection and calculate the cost in ecological improvement by the upstream. • Accounting on opportunity cost for development: • Annual compensation amount = (the per capita disposable income of urban residents of referenced county - the per capita disposable income of urban residents of upstream area) × the urban population in upstream area + (the net per capita income of rural residents of referenced county- the net per capita income of rural residents of the upstream) × the rural population in the upstream

7. 3. Methods and Discussion • Acreage changes of land use in upstream areas in the year of 2000 and 2009

8. 3. Methods and Discussion • Changes of Ecosystem Services value in Zhangjiakou city at upstream in the year of 2000 and 2009 • (Unit: Billion )

9. Lowered Improved 3. Methods and Discussion • Relationship between Ecosystem Services and Eco-compensation Change of ecosystem services function value Change of beneficiary group Food production function Delaying population economic development in the upstream water conservation soil formation functional biodiversity Watershed Ecosystem service shared between the upstream and downstream Spatio-temporal asymmetry in distribution of Watershed ecosystem services Input of cost for ecological construction and protection Lost of development opportunities Compensation to the upstream by the downstream

10. 3. Methods and Discussion • Eco-compensation Mechanism——Research object • Object ： • Zhangjiakou at upstream to provide watershed ecosystem service • Subject: • Beijing at downstream to enjoy watershed ecosystem service

11. 3. Methods and Discussion • Eco-compensation Mechanism——Criteria • Eco-Compensation Criteria Based on the Input in Ecological Construction and Pollution Abatement by the Upstream • Cost for Water Pollution Abatement：According to Water Pollution Prevention Plan for Haihe River Basin (2006-2010), the input was about 126 million Yuan in 2009. • Cost for Soil Erosion Control and Prevention:According to the pilot project of return cultivated land to forest,the average investment of 2009 was about 486 million Yuan. • Totally about 612 million Yuan • Eco-Compensation Criteria Based on Opportunity Cost of Development of the Upstream Area • In comparison of the living standard in Zhangjiakou city with the average nationwide, the loss represented by Zhangjiakou city of development opportunity missed in 2009 was about 10.855 billion Yuan.

12. 3. Methods and Discussion • Eco-compensation Mechanism——Approaches • Financial Compensation • Invest and conduct eco-construction projectsat the upstreamby Beijing • Raise water price of Beijing and use the increased capital per certain percentage as eco-compensation funds • Policy Measures • Develop compensation policies considering the specific situations of Guanting Reservoir on finance, taxation, investment and industrial development, so as to shorten social and economic gap between the upstream and downstream.

13. 3. Methods and Discussion • Eco-compensation Mechanism——Approaches • Industrial Transfer • Both of Beijing and Zhangjiakou city have the necessary conditions for industry transfer: Beijing and Zhangjiakou city are nearby at geographic location and have gradient differences in industrial development level. • Zhangjiakou city has a good foundation to accommodate labor-intensive, resource-based, high-tech and low pollution enterprises. • Intelligent Assistance • In the further several years, Beijing will have a great labor needs especially manufacturing personnel, which may provide a good chance for Zhangjiakou city at upstream to export its labor services.

14. 4. Conclusions • Necessity of Compensation • Watershed ecosystem services have a spatial asymmetry between the upstream and downstream which is the basis to implement eco-compensation mechanism. • Basis for Accounting Methods of Eco-compensation Criteria • Cost for ecological improvement and abatement conducted by the upstream and the relative loss caused by missing development opportunity. • Eco-compensation Approaches • The eco-compensation criteriabased on cost for ecological improvement and abatement shall mainly adopt means of financial compensation. • The eco-compensation criteriabased on development opportunity shall mainly adopt means of policy measures, industrial transfer and intelligent assistance.

15. 5. Perspective • It is also tendency of the future study to quantify contribution ratio of eco-compensation approaches to eco-compensation criteria through scenario analysis. • This study starts a pioneer research based on literature review and current studies, along with mature material collections and in-depth study on theory, the result will be provided more accurately.

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