Assessing Development Opportunity Loss in River Source Area Based on Comparison of Cumulative Growth Rates of Per Capita GDP

Changfeng Ding, Fulin Cai, Feng Liu, Baiyinbaoligao and Fengran Xu ()
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Changfeng Ding: College of Water Conservancy and Hydropower Engineering, Hohai University, Nanjing 210098, China
Fulin Cai: College of Water Conservancy and Hydropower Engineering, Hohai University, Nanjing 210098, China
Feng Liu: State Key Laboratory of Simulation and Regulation of Water Cycle in River Basin, China Institute of Water Resources and Hydropower Research, Beijing 100038, China
Baiyinbaoligao: State Key Laboratory of Simulation and Regulation of Water Cycle in River Basin, China Institute of Water Resources and Hydropower Research, Beijing 100038, China
Fengran Xu: State Key Laboratory of Simulation and Regulation of Water Cycle in River Basin, China Institute of Water Resources and Hydropower Research, Beijing 100038, China

Sustainability, 2025, vol. 17, issue 19, 1-21

Abstract: River source areas often face stricter environmental protection requirements, leading to external cost and development opportunity losses. Quantifying such losses is essential for designing ecological compensation mechanisms (payment for ecological services). Existing methods often lack scientific rigor and practical feasibility. A method based on the comparison of Cumulative Growth Rates of Per Capita GDP (CGR-PCGDP) is proposed and applied to the water source area of the Middle Route of the South-to-North Water Diversion Project (MR-SNWDP) in China. The method quantifies the fiscal opportunity losses by comparing the CGR-PCGDP between the water source area and a reference area, and deducting growth rate differences before the baseline year. Regions in closer proximity to the Danjiangkou Reservoir—the source point of water diversion—have been found to be more markedly affected by stricter protection policies, resulting in greater development opportunity losses. Shiyan City and Nanyang City experienced annual average fiscal opportunity losses of CNY 569 million and 371 million, respectively, whereas cities farther from the reservoir, such as Hanzhong City, Ankang City, and Shangluo City, incurred lower losses. Compared to traditional approaches, this method avoids overestimation and offers practical, evidence-based results. How factors like geographical location, economic structure, fiscal compensation, and economic transformation capacity affect losses is further discussed, and strategies for balanced development and effective ecological compensation are proposed. The study offers methodological and referential support for the establishment of ecological compensation standards in river source areas.

Keywords: river source area; water diversion project; ecological compensation mechanism; payment for ecological services; development opportunity loss; CGR-PCGDP comparison (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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