The economic potential of payments for ecosystem services in water conservation: a case study in the upper reaches of Shiyang River basin, northwest China

Zeng Tang, Yulan Shi, Zhibiao Nan and Zhongmin Xu

Environment and Development Economics, 2012, vol. 17, issue 4, 445-460

Abstract: In this paper, we conduct an investigation to assess the economic potential of payments for ecosystem services to conserve water through the conversion of land under irrigation into rain-fed land in the upper reaches of the Shiyang River basin, located in northwest China. We use an approach developed by Antle and Valdivia (2006, Australian Journal of Agricultural and Resource Economics, 50: 1–15) to estimate the supply of water. The analysis shows that it is theoretically possible to reduce agricultural water consumption and subsequently increase the water supply, which would aid the prevention of environmental degradation in the middle and lower reaches of the Shiyang River basin. In addition to the conservation of water, considerable income would be generated by local farmers, which would help to alleviate poverty. Furthermore, the analysis also suggests that more complete data on ecosystem services rates, transaction costs and other related factors would be of value for achieving a more comprehensive assessment.

Date: 2012
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