Cross-Boundary Watershed Eco-Compensation Based on Water Quantity and Quality from Both Production and Consumption Perspectives

Eco-compensation has become an important policy instrument for integrated watershed management in China. However, quantitative approaches that jointly consider water quantity and quality from both production and consumption perspectives remain limited, constraining the systematic development of eco-compensation standards. This study proposes a funding allocation framework based on Water Yield Equivalent (WYE) and Water Consumption Equivalent (WCE) indicators incorporating both water quality and quantity, and applies it to the upper Miyun Reservoir watershed. Compensation funds were calculated for nine counties in 2000, 2008, and 2013. The results show substantial spatial differences in WYE and WCE, resulting in differentiated compensation responsibilities and receipts. Under the baseline scenario, Miyun County received the highest compensation in 2008 (RMB 198 million), whereas Chicheng County incurred the highest compensation payment in 2000 (RMB 135 million). Further comparison with local fiscal revenue indicates that the ratio of compensation funds to fiscal revenue reflects the potential relative fiscal incentive or constraint of the eco-compensation scheme on local governments. In 2013, Yanqing County had the highest ratio under the baseline scenario, at 12.76%, which increased to 22.59% under the South-to-North Water Diversion Project (SNWDP) water price scenario. Overall, jointly accounting for water quantity, quality, production, and consumption provides a quantitative basis for differentiating compensation responsibilities and benefits across counties. For the Miyun Reservoir watershed, future eco-compensation policies could further integrate water resource protection and pollution reduction requirements to establish differentiated compensation standards, thereby improving the coordination between the compensation mechanism and watershed water resource management objectives.