An institutional analysis of the historical process and development trend of payments for watershed services in China

This study examines China’s Payments for Watershed Services (PWS) from the founding of the People’s Republic of China in 1949 to the present, drawing on Ostrom’s multi-level analytical framework. From a rule-based perspective, it compares the specific situation and main characteristics of payment for ecosystem services (PES) in China’s watersheds at different historical stages, understands the hierarchy of PWS rules and the interaction between different levels, which helps to grasp the overall framework of PWS and carry out the next stage of high-quality innovation of the PWS system. The results show that since the founding of the People’s Republic of China in 1949, China’s PWS system has undergone the establishment and improvement process of ‘from inception to establishment’ and ‘from consolidation to optimization’. The study also finds that China’s watershed ecological compensation payment system boasts a globally leading investment scale, representing 94% of global PWS investment, and extensive implementation coverage, with such programs already launched in 18 provincial-level regions across the country. This stems from a dynamic feedback loop formed by the top-down institutional design and bottom-up practical exploration of the system. The rules of the top-level design lay the foundation for the practice of PES in the river basin, which are reflected in the property rights of river basin resources, river basin management, and the paid use of river basin system services. At the same time, the practice of PWS has promoted the improvement of the top-level design. The elements of PWS have discovered problems in practice and proposed possible solutions in policy reforms. In conclusion, China’s PWS system needs to continue to promote river basin protection legislation, in order to improve the Constitutional-Choice Level; establish a market-oriented and diversified PWS to further innovate at the Collective-Choice Level and Operational Level.