China Policy Journal Volume 1, Number 1, Fall 2018 | Page 66

Payment for Ecological Services and River Transboundary Pollution
trapolates the results obtained by one
or many primary studies; it is thus not
suitable for a primary study focusing
on a specific test area. Compared with
the abovementioned methods, the stated
preference methods provide a more
flexible approach and aim at establishing
a hypothetical market framework;
therefore, it can include in its assessment
both the use value and the nonuse
value of EGS. However, stated preference
methods also face criticisms that
are related to their hypothetical nature
(e.g., Carson and Groves (2007); Harrison
and Rutström 2008; List and Gallet
2001; Murphy et al. 2005) and its potential
influence on collected answers from
respondents, which may lead to either
an over- or under-estimation of people’s
WTP.
Our review of the related literature
provided us with a quite interesting
picture about the academic efforts in
evaluating such welfare benefits. Over
the last several decades, many Chinese
scholars conducted interesting case
studies with the aim of stimulating discussion
about how to set PES payment
standards. Some of them employed diverse
methods based on market prices
or opportunity cost, such as Cai, Lu,
and Song (2008), who calculated the
total engineering cost of the construction
project for the water source protection
area in the eastern route of the
South-to-North Water Transfer Project
and proposed a cost-sharing plan between
regions based on the potential
added-value of the ecological service
improvement that they would receive.
Li et al. (2009) estimated the opportunity
cost of the forest protection project
on the mountainous regions of
Hainan and proposed to determine the
payment standard based on the land
holdings of different regions. Shen et
al. (2009) estimated the potential loss
of agricultural production due to the
Green Agricultural Demonstration
Project on Chongming Island. We also
found several papers that calculated
the loss of economic development opportunities
due to water conservation
projects in some river drainage basins,
such as Fu, Ruan, and Zhang (2011) for
the Yongding river, Zhang (2011) for
the Xijiang river and Shi et al. (2012)
for the Dongjiang river. Other authors
chose to evaluate the potential value of
the conserved ecological services; for
example, Xu et al. (2006) calculated the
ecological service value of the Lianhua
Reservoir ecological protection project,
Huang, Luo, and Yang (2008) estimated
the ecological service value of the
Dayao Mountain’s water conservation
project, Jin and Wang (2008) evaluated
the use and non-use value of ecological
services provided by the water conservation
forest on Qilian Mountain and
Cai et al. (2010) estimated the ecological
service value of the wetlands in the
Qilihai natural protection areas.
However, is proposing some
numbers better than having no numbers?
One common difficulty that those
studies faced was the big divergence
between the numbers they proposed.
Some of these differences can be explained
by the differences in the methodologies
used. For example, the methods
based on the opportunity cost may
only include the use value of the ecological
services in their estimates, whereas
the stated preference methods have the
capacity to include the non-observable
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