Development of payment standards for ecosystem services in the largest interbasin water transfer projects in the world

Abstract

Interbasin water transfer (IBWT) projects effectively overcome water shortages resulting from the uneven distribution of water resources and water demand. However, these projects may also create water conflicts between the water source and receiving areas. As a method to solve water conflicts, the payments for an ecosystem services (PES) approach determines a payment standard based on different calculation methods. However, an overall survey revealed that few PES studies had applied to evaluate IBWT projects by these different calculation methods, and no comparison has been made among these payment standards. This study applied the conservation cost method (CCM), the market value method (MVM), and the payment ability method (PAM) to determine payment standards for the Middle Route Project of the South-to-North Water Diversion project in China, the largest IBWT project in the world. It seems that the CCM-based payment standard (72.30 billion CNY) would contribute to environmental conservation and economic loss compensation in the water source area. The MVM-based payment standard (82.44 billion CNY) would stimulate economic development in the water source area besides environmental conservation and economic loss compensation. The PAM-based payment standard (109.74 billion CNY) would greatly accelerate economic development in the water source area; however, it should solely be used as a reference value in order to allow for economic development in the water receiving area.