An evolutionary game analysis of governments’ decision-making behaviors and factors influencing watershed ecological compensation in China

Abstract

As a way to coordinate the interests of multi-government and solve the problem of transboundary water pollution, watershed ecological compensation system has been promoted in China. It is necessary to understand the influencing factors of watershed ecological compensation from the perspective of how interactions occur between different governments. This paper analyses the interaction among upstream governments, downstream governments and the central government in the Eastern Route of South-to-North Water Transfer Project, using evolutionary game theory. In particular, how ecological benefits are distributed between upstream and downstream governments is analyzed. Simultaneously, numerical simulation is used to analyze the effects of influencing factors on governments’ behaviors. The results show that: (1) the initial willingness of governments to corporate affect their final behaviors; (2) upstream and downstream governments cannot spontaneously cooperate to implement watershed ecological compensation system without supervision of the central government; (3) opportunity costs only have a significant impact on upstream governments; (4) punishment on downstream governments can effectively influence the behaviors of governments at all levels; (5) high ecological compensation fee improve downstream governments' willness not to pay; (6) upstream governments get about 78% of ecological benefits due to the implementation of watershed ecological compensation system.