Opportunity cost, income structure, and energy structure for landholders participating in payments for ecosystem services: Evidence from Wolong National Nature Reserve, China

Abstract

Payments for ecosystem services (PES) have become a valuable policy tool for the conservation and restoration of ecosystems. The central premise of PES success is that landholders are willing to provide ecosystem services. However, previous studies failed to consider this willingness of landholders to participate in PES within the theoretical frameworks of opportunity cost, income structure, and energy structure. This lack results in the deviation of the existing PES project design from market-based incentives and gravitation toward adopting command-and-control subsidies that are typically intended to be replaced. To fill this gap, this study examines the effects of opportunity cost, income structure, and energy structure on the participation of landholders in PES, using the panel data of the household survey of the Grain-to-Green Program in the Wolong National Nature Reserve, China. The obtained findings demonstrate an inverted U-shaped curve relationship between opportunity cost and landholder participation rate, suggesting that the participation of landholders in PES does not always decrease with increasing opportunity cost. The dependence of landholders on cropland income is inversely proportional to their participation in PES. The effects of other agricultural income on the decision-making of householders were not significant. Moreover, the fuelwood-based energy structure negatively affects the participation of landholders in PES. Therefore, we argue that the formulation of PES incentives in line with local socioeconomic conditions and individual preferences can further stimulate the landholder participation in PES.