Watershed Eco-Compensation Mechanism in China: Policies, Practices and Recommendations

Watershed eco-compensation (WEC) is considered a significant environmental policy instrument for watershed ecological protection and management. However, in the legislation and practice of eco-compensation in China, the development of the WEC mechanism is still in the initial stages. In this paper, the institutional opportunities and challenges of WEC are analyzed from the existing policies, laws, and economical instruments. Theoretically, WEC in China has seen a combination of punitive-based Watershed Ecological Damage Compensation (WEDC) and incentive-based Watershed Ecological Protective Compensation (WEPC). Through a comparative analysis of domestic and foreign watershed compensation practices, the results demonstrate that most of China's WEC projects have an insufficient legal basis, a single compensatory subject, insufficient compensation funds, and an imperfect market-oriented compensation mechanism. To improve watershed eco-compensation in China, it is recommended to strengthen legislation, select diversified eco-compensation approaches, and establish a market-based and systematic eco-compensation mechanism for watersheds.

Automated summary

This paper analyzes the institutional opportunities and challenges of watershed eco-compensation in China. By comparing domestic and foreign practices, it identifies several issues in China's watershed eco-compensation projects. To improve the situation, it suggests strengthening legislation, adopting diverse eco-compensation approaches, and establishing a market-based mechanism.