Cost-benefit Analysis and Payments For Watershed-scale Wetland Rehabilitation: A Case Study in Shandong Province, China

Abstract

The value of wetlands is receiving increasing attention and the Cost–Benefit Analyses (CBA) is essential to evaluate the long-term effects of wetland rehabilitation projects. In order to guarantee the water quality of the South-to-North Water Diversion Project of China (east route), the government of Shandong Province started a huge lakeshore wetland rehabilitation project in 2008. The CBA approach was used to evaluate the ecosystem services in the Nansi Lake watershed, in Shandong Province, China. A shadow project approach and market value approach were applied to estimate the economic values of restored wetlands. The results indicated that values of total net ecosystem service would increase each year after wetland rehabilitation and the net benefit varied with the types of the farmland. The increased amount of ecosystem value brought by the wetland rehabilitation project with three types of farmlands will be 747% for low-productive cropland, 257% for ordinary-productive cropland and 32% for vegetable field per hectare each year. The opportunity cost of farmers who enroll in the project will be 1,575 RMB (Chinese Currency, 6.8 RMB=US$1) for lowproductive cropland, 10,027 RMB for ordinary-productive cropland, 40,560 RMB for vegetable field per hectare each year. These results provide decision makers with data on related benefits and opportunity cost of the wetland rehabilitation program in the Nansi Lake watershed.These results are important not only to certify the ecological significance of the project, but also to choose priority of restoring farmland areas and to determine the amount of payments for ecosystem services.