IDEAS home Printed from https://ideas.repec.org/a/eee/agiwat/v295y2024ics0378377424000684.html
   My bibliography  Save this article

Linking water markets with payments for watershed services: the eastern route of China's South-North Water Transfer Project

Author

Listed:
  • Sheng, Jichuan
  • Yang, Hongqiang

Abstract

This study develops an analytical framework that takes a dynamic game approach to links between water markets and payments for watershed services (PWS). Using a case study of the eastern route of China's South-North Water Transfer Project (SNWTP-ER), this study explores the changing behavior of various stakeholders in the water market in different PWS scenarios and the economic rationality driving these behaviors. This study argues that linking water markets and PWS would improve the benefits for each stakeholder, thus making it an economic rationale that drives water suppliers to provide water quality maintenance and improvement services. In addition, introducing intensive incentives for PWS in water markets can make it possible to improve profitability and water quality simultaneously. Finally, linking water markets and PWS remains challenging because the differences in the nature of the two markets lead to divergent views on the distribution of their profits.

Suggested Citation

  • Sheng, Jichuan & Yang, Hongqiang, 2024. "Linking water markets with payments for watershed services: the eastern route of China's South-North Water Transfer Project," Agricultural Water Management, Elsevier, vol. 295(C).
    • Handle: RePEc:eee:agiwat:v:295:y:2024:i:c:s0378377424000684
    DOI: 10.1016/j.agwat.2024.108733
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378377424000684
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.agwat.2024.108733?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Marca Weinberg & Catherine L. Kling & James E. Wilen, 1993. "Water Markets and Water Quality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 278-291.
    2. Jon Barnett & Sarah Rogers & Michael Webber & Brian Finlayson & Mark Wang, 2015. "Sustainability: Transfer project cannot meet China's water needs," Nature, Nature, vol. 527(7578), pages 295-297, November.
    3. Iftekhar, M.S. & Tisdell, J.G. & Connor, J.D., 2013. "Effects of competition on environmental water buyback auctions," Agricultural Water Management, Elsevier, vol. 127(C), pages 59-73.
    4. Pagiola, Stefano & Arcenas, Agustin & Platais, Gunars, 2005. "Can Payments for Environmental Services Help Reduce Poverty? An Exploration of the Issues and the Evidence to Date from Latin America," World Development, Elsevier, vol. 33(2), pages 237-253, February.
    5. Brownson, Katherine & Fowler, Laurie, 2020. "Evaluating how we evaluate success: Monitoring, evaluation and adaptive management in Payments for Watershed Services programs," Land Use Policy, Elsevier, vol. 94(C).
    6. Min Jiang & Michael Webber & Jon Barnett & Wenjing Zhang & Gang Liu, 2022. "Making a water market intermediary: the China Water Exchange," International Journal of Water Resources Development, Taylor & Francis Journals, vol. 38(4), pages 699-716, July.
    7. Jean Carlo Rodríguez-de-Francisco & Rutgerd Boelens, 2016. "PES hydrosocial territories: de-territorialization and re-patterning of water control arenas in the Andean highlands," Water International, Taylor & Francis Journals, vol. 41(1), pages 140-156, January.
    8. Danyang Di & Zening Wu & Huiliang Wang & Cuimei Lv, 2020. "A Double-Layer Dynamic Differential Game Model for the Optimal Trading Quantity of Water and Price Setting in Water Rights Transactions," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 34(1), pages 245-262, January.
    9. Luo, Chunlin & Zhou, Xiaoyang & Lev, Benjamin, 2022. "Core, shapley value, nucleolus and nash bargaining solution: A Survey of recent developments and applications in operations management," Omega, Elsevier, vol. 110(C).
    10. Van Hecken, Gert & Bastiaensen, Johan & Vásquez, William F., 2012. "The viability of local payments for watershed services: Empirical evidence from Matiguás, Nicaragua," Ecological Economics, Elsevier, vol. 74(C), pages 169-176.
    11. Jones, Kelly W. & Avila Foucat, Sophie & Pischke, Erin C. & Salcone, Jacob & Torrez, David & Selfa, Theresa & Halvorsen, Kathleen E., 2019. "Exploring the connections between participation in and benefits from payments for hydrological services programs in Veracruz State, Mexico," Ecosystem Services, Elsevier, vol. 35(C), pages 32-42.
    12. Cvitanic Jaksa & Wan Xuhu & Zhang Jianfeng, 2008. "Principal-Agent Problems with Exit Options," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-43, October.
    13. Bösch, Matthias & Elsasser, Peter & Wunder, Sven, 2019. "Why do payments for watershed services emerge? A cross-country analysis of adoption contexts," World Development, Elsevier, vol. 119(C), pages 111-119.
    14. Tracey Osborne & Elizabeth Shapiro-Garza, 2018. "Embedding Carbon Markets: Complicating Commodification of Ecosystem Services in Mexico's Forests," Annals of the American Association of Geographers, Taylor & Francis Journals, vol. 108(1), pages 88-105, January.
    15. Bryan Leonard & Christopher Costello & Gary D Libecap, 2019. "Expanding Water Markets in the Western United States: Barriers and Lessons from Other Natural Resource Markets," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(1), pages 43-61.
    16. Julian Rode, 2022. "When payments for ecosystem conservation stop," Nature Sustainability, Nature, vol. 5(1), pages 15-16, January.
    17. Raymond Yu Wang & Cho Nam Ng & Xiaoxing Qi, 2020. "The Chinese characteristics of payments for ecosystem services: a conceptual analysis of water eco-compensation mechanisms," International Journal of Water Resources Development, Taylor & Francis Journals, vol. 36(4), pages 651-669, July.
    18. Lin, Yongsheng & Dong, Zhanfeng & Zhang, Wei & Zhang, Hongyu, 2020. "Estimating inter-regional payments for ecosystem services: Taking China’s Beijing-Tianjin-Hebei region as an example," Ecological Economics, Elsevier, vol. 168(C).
    19. Nguyen, N.P. & Shortle, J.S. & Reed, P.M. & Nguyen, T.T., 2013. "Water quality trading with asymmetric information, uncertainty and transaction costs: A stochastic agent-based simulation," Resource and Energy Economics, Elsevier, vol. 35(1), pages 60-90.
    20. Kuwayama, Yusuke & Brozović, Nicholas, 2013. "The regulation of a spatially heterogeneous externality: Tradable groundwater permits to protect streams," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 364-382.
    21. Kosoy, Nicolas & Martinez-Tuna, Miguel & Muradian, Roldan & Martinez-Alier, Joan, 2007. "Payments for environmental services in watersheds: Insights from a comparative study of three cases in Central America," Ecological Economics, Elsevier, vol. 61(2-3), pages 446-455, March.
    22. Boelens, Rutgerd & Vos, Jeroen, 2012. "The danger of naturalizing water policy concepts: Water productivity and efficiency discourses from field irrigation to virtual water trade," Agricultural Water Management, Elsevier, vol. 108(C), pages 16-26.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Van Hecken, Gert & Merlet, Pierre & Lindtner, Mara & Bastiaensen, Johan, 2019. "Can Financial Incentives Change Farmers' Motivations? An Agrarian System Approach to Development Pathways at the Nicaraguan Agricultural Frontier," Ecological Economics, Elsevier, vol. 156(C), pages 519-529.
    2. Dongbin Hu & Mei Lin & Yang Chen, 2022. "Can Horizontal Ecological Compensation Improve the Water Environment in Cross-Provincial Watersheds?," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    3. Bremer, Leah L. & Farley, Kathleen A. & Lopez-Carr, David & Romero, José, 2014. "Conservation and livelihood outcomes of payment for ecosystem services in the Ecuadorian Andes: What is the potential for ‘win–win’?," Ecosystem Services, Elsevier, vol. 8(C), pages 148-165.
    4. Sheng, Jichuan & Cheng, Qian & Yang, Hongqiang, 2024. "Water markets and water inequality: China's water rights trading pilot," Socio-Economic Planning Sciences, Elsevier, vol. 94(C).
    5. Locatelli, Bruno & Rojas, Varinia & Salinas, Zenia, 2008. "Impacts of payments for environmental services on local development in northern Costa Rica: A fuzzy multi-criteria analysis," Forest Policy and Economics, Elsevier, vol. 10(5), pages 275-285, April.
    6. Ina, Porras & Bruce, Alyward & Jeff, Dengel, 2013. "Monitoring payments for watershed services schemes in developing countries," MPRA Paper 47185, University Library of Munich, Germany.
    7. Kosoy, Nicolás & Corbera, Esteve, 2010. "Payments for ecosystem services as commodity fetishism," Ecological Economics, Elsevier, vol. 69(6), pages 1228-1236, April.
    8. Jones, Kelly W. & Muñoz Brenes, Carlos L. & Shinbrot, Xoco A. & López-Báez, Walter & Rivera-Castañeda, Andrómeda, 2018. "The influence of cash and technical assistance on household-level outcomes in payments for hydrological services programs in Chiapas, Mexico," Ecosystem Services, Elsevier, vol. 31(PA), pages 208-218.
    9. Kisaka, Lily & Obi, Ajuruchukwu, 2015. "Farmers’ Preferences for Management Options as Payment for Environmental Services Scheme," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 18(3), pages 1-22, September.
    10. Ekbom, Anders & Brown, Gardner M. & Sterner, Thomas, 2009. "Muddy Waters: Soil Erosion and Downstream Externalities," Working Papers in Economics 341, University of Gothenburg, Department of Economics.
    11. Farley, Joshua & Costanza, Robert, 2010. "Payments for ecosystem services: From local to global," Ecological Economics, Elsevier, vol. 69(11), pages 2060-2068, September.
    12. Kathleen McAfee, 2012. "The Contradictory Logic of Global Ecosystem Services Markets," Development and Change, International Institute of Social Studies, vol. 43(1), pages 105-131, January.
    13. Vignola, Raffaele & McDaniels, Tim L. & Scholz, Roland W., 2012. "Negotiation analysis for mechanisms to deliver ecosystem services: The case of soil conservation in Costa Rica," Ecological Economics, Elsevier, vol. 75(C), pages 22-31.
    14. Hong-Zhen Zhang & Ling-Yun He & ZhongXiang Zhang, 2023. "Can Transverse Eco-compensation Mechanism Correct Resource Misallocation in Watershed Environmental Governance? A Cost-benefit Analysis of the Pilot Project of Xin’an River in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(4), pages 947-973, April.
    15. Jichuan Sheng & Xiao Han, 2023. "Constructing payments for ecosystem services hydrosocial territories through assemblage practices: China’s Xin’an river basin eco-compensation pilot," Environment and Planning C, , vol. 41(2), pages 375-391, March.
    16. Zanella, Matheus A. & Schleyer, Christian & Speelman, Stijn, 2014. "Why do farmers join Payments for Ecosystem Services (PES) schemes? An Assessment of PES water scheme participation in Brazil," Ecological Economics, Elsevier, vol. 105(C), pages 166-176.
    17. Lliso, Bosco & Pascual, Unai & Engel, Stefanie & Mariel, Petr, 2020. "Payments for ecosystem services or collective stewardship of Mother Earth? Applying deliberative valuation in an indigenous community in Colombia," Ecological Economics, Elsevier, vol. 169(C).
    18. Campanhão, Ligia Maria Barrios & Ranieri, Victor Eduardo Lima, 2019. "Guideline framework for effective targeting of payments for watershed services," Forest Policy and Economics, Elsevier, vol. 104(C), pages 93-109.
    19. Swallow, Brent & Leimona, Beria & Yatich, Thomas & Velarde, Sandra J., 2010. "The conditions for functional mechanisms of compensation and reward for environmental services," MPRA Paper 26308, University Library of Munich, Germany.
    20. Pascual, Unai & Muradian, Roldan & Rodríguez, Luis C. & Duraiappah, Anantha, 2010. "Exploring the links between equity and efficiency in payments for environmental services: A conceptual approach," Ecological Economics, Elsevier, vol. 69(6), pages 1237-1244, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:agiwat:v:295:y:2024:i:c:s0378377424000684. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/agwat .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.