Quantitative simulation of ecological compensation approaches in transboundary watersheds of China: A scenario analysis based on a multi-regional CGE model

Watershed ecological compensation is becoming increasingly important as an effective way to achieve transboundary watershed governance. The large regional differences in economic development and watershed governance across China require the implementation of regionally differentiated policies. Previous studies have not systematically examined the potential impacts of ecological compensation approaches at the regional scale in China. As the Beijing-Tianjin-Hebei region is representative of China with severe watershed problems, the establishment of a watershed ecological compensation mechanism in this region has a demonstrated effect on solving regional co-management problems. By establishing a multi-regional dynamic CGE (Computable General Equilibrium) model with water quality and quantity control as constraints, the long-term impacts of different ecological compensation methods on different districts are assessed in terms of economic development, social welfare and water environment management, based on which the preferred compensation methods for the development of the three districts and the whole region are to be identified. The study shows that: I) Different compensation approaches have varying impacts on regional ecology and economy, and trade-offs need to be made between the two to choose the appropriate compensation approach to provide a long-term incentive for regional watershed governance and maintenance; II) The compensating areas prefer short-term compensation such as financial subsidies, while the compensated areas prefer long-term compensation such as industrial support; III) Financial funds can support the development of primary and secondary industries in the short term, and subsidies to enterprises contribute to the overall economic synergy of the region, while industrial support from compensating areas to compensated area requires long-term layout. Accurate measurement of the potential impacts of different ecological compensation approaches can provide a scientific basis for the establishment of a long-term ecological compensation mechanism, and the model can also be applied to other regional policies to provide a reference for solving transboundary governance issues.