Effectiveness and Impacts of Ecological Fiscal Transfers and Payments for Environmental Services: A Case Study of Shengnongjia National Nature Reserve

Abstract

The use of economic instruments (EIs) for conserving ecosystem services is gaining increasing attention. However, the literature available on the analysis and assessment of EIs’ effectiveness and impacts focuses mostly on the experience in developed countries. In recent years, there is growing interest among developing countries, including China, in applying EIs in conserving biodiversity and other ecosystem services. Specific challenges faced by developing countries are not the same with those by the developed world. So far, not much has been done in analysing and assessing EIs effectiveness and their interaction with the specific challenges in the developing context, such as poverty alleviation. This dissertation looks into the performance of two EIs, i.e. Ecological Fiscal Transfers (EFT) and Payments for Environmental Services (PES), in achieving conservation effectiveness and their economic and social impacts, through a case study on the Shengnongjia National Nature Reserve in China. It is found that the conservation effectiveness (like additionality and leakage), economic impacts (like income, jobs, and fiscal revenues) and social impacts (like distributive fairness) fall short of devised goals to some extent. The case study also found that ignoring economic and social dimensions of EIs application may lead to unexpected negative consequences on conservation effectiveness. Besides, the paper discusses some open questions related to institutional preconditions for applying EIs and PES in developing context which deserve further research in the future. The findings drawn from this case study provide a test and confirmation of the academic proposal that equity and poverty issue should be taken into account in the process of designing and using EIs, in particular in developing countries.