Payment Criteria and Mode for Watershed Ecosystem Services: A Case Study of the Heihe River Basin, Northwest China

Quantitative evaluation of the relationship between payment criteria and the amount of additional ecosystem services can improve the cost-effectiveness of payment for ecosystem services (PES) projects. This paper simulated additional water conservation (AWC) using the Soil and Water Assessment Tool (SWAT) model, examined appropriate payment criteria, and matched different payment modes with local herders’ preferences in Northwest China. The results showed that if all the low-coverage grass areas were to be closed through PES projects, the actual payment criteria, 37 yuan/ha, would need to be increased eight times, which would be 302 yuan/ha. Along with that, annual AWC could reach 1.69 × 106 m3. If PES projects were implemented in all the low- and medium-coverage grass areas, payment criteria would need to be increased to 365 yuan/ha, and the annual AWC would reach 2.59 × 106 m3. There were scale economy effects in this range, because a 21% increase in the payment criteria would result in a 66% increase in the total AWC. The appropriate mode for herders above 40 years old is “cash + in-kind compensation” and “cash + capacity” for those below 40, due to the preferences varying in age.