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Measuring the incremental impact of Payments for Watershed Services on water quality in a transboundary river basin in China

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  • Zeng, Qingmin
  • Brouwer, Roy
  • Wang, Yurong
  • Chen, Ligen

Abstract

This study assesses the incremental impact of the first transboundary Payments for Watershed Services (PWS) scheme on water quality in China. Due to the absence of a control situation without the PWS scheme, the synthetic control method (SCM) is applied to construct a counterfactual for the prefecture city Huangshan in Eastern China where the PWS is implemented based on the socio-economic characteristics of more than 75 other prefecture cities. The creation of such a counterfactual is crucial in view of the declining trend in water pollution observed before implementation of the PWS scheme. Despite this downward trend in water pollution, an additional effect of the PWS scheme is observed. This result is not obtained when using any of the other prefecture cities as a placebo to test the robustness of this outcome. The application of the SCM in this study is a promising new avenue for the evaluation of PWS schemes elsewhere where similar control conditions are lacking. However, as we show, its applicability depends crucially on the availability of relevant water quality monitoring data.

Suggested Citation

  • Zeng, Qingmin & Brouwer, Roy & Wang, Yurong & Chen, Ligen, 2021. "Measuring the incremental impact of Payments for Watershed Services on water quality in a transboundary river basin in China," Ecosystem Services, Elsevier, vol. 51(C).
    • Handle: RePEc:eee:ecoser:v:51:y:2021:i:c:s2212041621001133
    DOI: 10.1016/j.ecoser.2021.101355
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    References listed on IDEAS

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    1. Dongbin Hu & Mei Lin & Yang Chen, 2022. "Can Horizontal Ecological Compensation Improve the Water Environment in Cross-Provincial Watersheds?," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    2. Huang, Dayan & Liu, Chengyi & Yan, Zehao & Kou, Aiju, 2023. "Payments for Watershed Services and corporate green innovation," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 541-556.
    3. Yunyun Qi & Tianye Zhang & Jing Cao & Cai Jin & Tianyu Chen & Yue Su & Chong Su & Srikanta Sannigrahi & Arabinda Maiti & Shiqi Tao & Qi Zhang & Tan Li, 2022. "Heterogeneity Impacts of Farmers’ Participation in Payment for Ecosystem Services Based on the Collective Action Framework," Land, MDPI, vol. 11(11), pages 1-20, November.

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