How to Price Ecosystem Water Yield Service and Determine the Amount of Compensation?—The Wei River Basin in China as an Example

Yuanyuan Li, Zhenmin Ding, Shunbo Yao, Caixia Xue, Yuanjie Deng, Lei Jia, Chaoqing Chai and Xiao Zhang
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Yuanyuan Li: College of Economics and Management, Northwest A&F University, Xianyang 712100, China
Zhenmin Ding: College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China
Shunbo Yao: College of Economics and Management, Northwest A&F University, Xianyang 712100, China
Caixia Xue: College of Economics and Management, Northwest A&F University, Xianyang 712100, China
Yuanjie Deng: College of Economics and Management, Northwest A&F University, Xianyang 712100, China
Lei Jia: College of Economics and Management, Northwest A&F University, Xianyang 712100, China
Chaoqing Chai: College of Economics and Management, Northwest A&F University, Xianyang 712100, China
Xiao Zhang: College of Economics and Management, Northwest A&F University, Xianyang 712100, China

Land, 2022, vol. 11, issue 7, 1-14

Abstract: Determining the price of water yield service is the core of watershed compensation. This is necessary to establish a reasonable and scientific compensation mechanism and achieve the efficient management of water. Unlike previous studies, this study establishes a theoretical model of pricing and a compensation mechanism for achieving a balance between the supply and demand of water yield service. A panel threshold model is used to estimate the production elasticity of water for pricing water yield service. Then, we analyze the spatial and temporal changes of the price and the compensation amounts of water yield service in the Wei River basin, China. The results show that: (1) The water marginal contribution to regional GDP meets the law of diminishing marginal return in the form of the threshold effect. When water input amounts (logarithm) are on both sides of 9.449, the marginal contribution is significantly different. (2) The price of water yield service shows an increasing trend. It was CNY 47.27/m 3 in 2015, increasing by 472.94% compared with 2000 (CNY 8.24/m 3 ). The spatial distribution was “high in the southeast and low in the northwest”. (3) Total payment amounts increased from CNY 33.1955 billion in 2000 to CNY 227.1302 billion in 2015 and were mainly distributed in relatively developed areas. The acceptance areas were concentrated in relatively undeveloped areas. Total acceptance amounts increased from CNY 2922.2 million in 2000 to CNY 16,398.6 million in 2015. This study can provide scientific basis for ecological compensation practices and promote high-quality development of the socio-economy of the watershed.

Keywords: water yield service; pricing strategy; compensation amounts; Wei River basin (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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