Payments For Ecosystem Services And Wealth Disparity: An Economic Model And An Empirical Study On The Qinghai-Tibetan Plateau, China

Abstract

This dissertation is focused on analyzing the relationship between Payments for Ecosystem Services (PES) and wealth disparity. Due to the fact that willingness to accept (WTA) is usually substantially higher than willingness to pay (WTP) for non-market environmental goods, the funding generated by PES projects is usually not sufficient to incentivize private landowners to provide Ecosystem Services (ES). The dissertation first presents an economic model to analyze the factors that influence WTP and WTA. Model simulation results indicate that, since high income people tend to have higher WTP while low income people tend to be willing to accept lower payments, wealth disparity between the buyers and suppliers of ES could help close the gap between WTP and WTA and increase the chances of ES transactions. Furthermore, the results of the economic model provide justifications for integrating poverty alleviation goals into PES programs. Next, the dissertation uses China as a specific case to demonstrate the results of the economic model in a real world setting. It examines China's socioeconomic, ecological, and institutional contexts, and shows that the significant wealth disparity between China's industrialized eastern provinces and ecosystem-services-rich western provinces could facilitate integrated PES and poverty alleviation programs. Finally, the dissertation presents the results of an empirical study on a large-scale eco-compensation program on the Qinghai-Tibetan Plateau, China. Analyses of the program show that livestock herders with lower income from grazing and those with more degraded grasslands are more willing to participate in eco-compensation program and accept relatively lower compensation for reducing intensity of grazing. This result is consistent with the conclusion of the economic model that low income people are more likely to participate and benefit from PES projects. Results also suggest that through enrolling these herders and restoring their degraded grasslands, PES project could achieve ecological benefits in an economically efficient manner. The empirical study also suggests that scientific-based measurements, voluntary-based participation, and outcome-based payments are critical for PES to succeed in the real world.