Effects of payments for watershed services policy on economic growth: a case study based on the synthetic control method

Hui Zhang (), Shuang Wu (), Yi Yu () and Lei Lei ()
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Hui Zhang: Nanjing Forestry University
Shuang Wu: Nanjing Forestry University
Yi Yu: Nanjing Agricultural University
Lei Lei: Nanjing Forestry University

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2021, vol. 23, issue 2, No 74, 2739-2761

Abstract: Abstract Payments for watershed services (PWS) can provide financial incentives to the watershed water environment protection in upstream regions. It is necessary to understand the influence of watershed ecological protection on economic development. In this paper, taking the Xin’anjiang River basin as a case, synthetic control method was used to analyze the effects of PWS policy implemented in Huangshan City from 2012 on its per capita GDP. The results showed that the PWS policy had a negative effect on per capita GDP in Huangshan City, which was reduced by 1.73%. It indicated that the payments were not enough to offset the opportunity cost of upstream regions, proving that the conservation of the environment was at the expense of sacrificing economic growth. However, the ecosystems and society benefited from the PWS policy. Attention should be paid to balance the economy, ecology, and society in the process of development. In addition, compensation fund and market-based mechanisms could be applied to help alleviate the pressure of government finance to realize the social economy sustainable development.

Keywords: Synthetic control method; Payments for watershed services; Economic growth (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10668-020-00699-w

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