Research into an ecological compensation standard in the Minjiang River Basin under the combined scenario of ‘clear property rights, water quality and quantity, and opportunity cost’ Open Access

An ecological compensation mechanism is an important system to maintain national ecological security, promote the construction of an ecological civilization and ensure social harmony and stability (Sun 2021). Ecological compensation is an effective channel to ensure ‘clear waters and lush mountains are invaluable assets’ to protect the environment by taking positive measures to offset the negative effects of economic development (Brown et al. 2014). The goal of ecological compensation is to pursue the balance of benefits between the beneficiaries of ‘mountains of gold and silver’ and the protectors of ‘clear waters and green mountains’. Ecological compensation originally came from payment for ecosystem or environmental services. Studies on ecosystem service functions began in the 1960s. In 1963, the conditional valuation method was applied to assess the recreational value of the forest in Maine. Since then, the method has been widely used to evaluate the recreational value of environmental resources in ecological compensation development (Burgin 2008; Bull et al. 2013), and research on the evaluation of ecosystem service functions became a hot topic and frontier in ecological economics (Böck et al. 2015). In 2000, the Chinese government issued the Outline of Ecological Protection, which proposed an ecological compensation system for the first time. With the establishment of an ecological compensation system, the measures of ecological compensation began to be implemented worldwide. At present, the methods of ecological compensation have been used in many countries in the world, including Australia, Costa Rica, Italy and New Zealand (Rega 2013; Rijke et al. 2013; Brown et al. 2014; Ross 2016).

Ecological compensation of river basins was one of the key areas for establishing ecological compensation mechanisms in China (Gao et al. 2019). In recent years, river basin ecological compensation has attracted extensive attention from society and the government. The establishment of river basin ecological compensation systems is the development direction of international and domestic environmental management (Sun et al. 2013; Xie et al. 2013; Guan et al. 2015; Yang et al. 2015). Currently, the quantification methods of river basin ecological compensation are generally based on water quality and quantity. The ecological compensation standards of river basins are generally calculated according to the ecological environment construction and protection costs (Guan et al. 2019), the value of ecosystem service functions or the value of the willingness to pay for ecological services and the water quality and quantity correction coefficient. Additionally, pollutant reduction and water quality of transboundary sections which meet the standards have also been taken into account (Marleni et al. 2015). However, these methods have limitations, and there are no unified quantitative standards. A calculation method for river basin ecological compensation with a scientific basis is not only a research hotspot in the field of resources and environment, but also an urgent technical difficulty needing to be solved in environmental management (Aguilar et al. 2018; Guan et al. 2018, 2019).

The externalities generated in the production and consumption of environmental resources, especially river pollution, as a typical regional environmental public good, have a negative impact on people's production and life, resulting in the loss of people's welfare (Chen 2017). However, the effects of river pollution externalities are not reflected through money or market transactions. Ultimately, the resources of the whole basin cannot be used optimally (Rao et al. 2016). Ecological compensation is based on low transaction costs and clear property rights (Murtinho & Hayes 2017). Property right is the ownership of goods. The ownership of the economic interests of goods can be allocated by the definition of property right. As public goods, most eco-environmental resources have externalities. According to Coase's theory of property rights transaction, unclear property rights are the root of economic activities' externalities (Wang 2021). In the process of social and economic activities, unclear definitions of property rights or unclear property rights are the main reasons for externalities. Nevertheless, there are few studies on the quantification of river basin ecological compensation based on property rights theory and different water quality standards.

Minjiang River is the largest river in Fujian Province, accounting for about half of the total area of the province. Ecological compensation in the Minjiang River basin has been trialed for several years, covering Fuzhou, Nanping, and Sanming cities. The development of ecological compensation in Minjiang River basin has played a positive role in mobilizing enthusiasm for environmental protection in the upstream areas and promoting the improvement of water environment quality (Qiu et al. 2018; Rao et al. 2019). However, ecological compensation in the Minjiang River basin has also encountered a series of problems in practice. There are few studies on how to promote the co-construction and sharing of the whole basin by defining upstream and downstream property rights, determining the ecological compensation standard, and eliminating the external impact of ecological and environmental protection activities (Rao et al. 2016). Considering that the river property rights of Minjiang River basin are relatively easy to define (belonging to the transregional river in Fujian Province), and the transaction cost is very small or zero, the problem of river basin ecological compensation is easy to solve (Qiu et al. 2018). The definition of ecological property rights is divided into three types: upstream has pollution rights, upstream has no pollution rights, and upstream and downstream undertake co-construction and sharing.

In this paper, an eco-compensation quantification model based on property rights, water quality and quantity, and opportunity cost was constructed at river basin level. This paper took the Minjiang River basin (Fujian Province, China) as an example to carry out a comprehensive ecological investigation. Total cost of protecting the ecological environment in the upstream area were calculated by superimposing the opportunity cost and ecological compensation standards of the Minjiang River Basin from 2015 to 2019. Finally, ecological compensation results of the Minjiang River Basin were analyzed from the aspects of time, space and compensation subject and object. The results are expected to provide a reference for establishing ecological compensation mechanisms at river basin level.

In this paper, the problem of ecological compensation was studied from the perspective of the combination of ‘clear property rights, water quality and quantity, and opportunity cost’. The primary objectives of this study were: (i) to judge whether it is ecological compensation or pollution compensation according to the water quality at each of the junction sections in the river basin and the definition of property rights in the upstream and downstream of the basin; (ii) to determine the distribution ratio of upstream and downstream according to the water allocation coefficient; and (iii) to calculate the total cost of protecting the eco-environment in the upstream area by superimposing the opportunity cost.

When defining the rights of eco-environmental protection compensation and pollution compensation, the upstream and downstream of Minjiang River basin were divided into three situations defined by the river's ecological property rights (Ma et al. 2017): ‘upstream has pollution rights’, ‘upstream has no pollution rights’ and ‘upstream and downstream co-construction and sharing’. Water quality was determined by comparing with the China Environmental Quality Standards for Surface Water (GB3838-2002) (CSEPB 2002; Li et al. 2021), which can be divided into five levels according to the surface water quality standard. Generally, levels I–III are applied to present chemical concentrations below which water quality is in a good condition, levels IV–V are used to present chemical concentrations above which water quality is in a polluted state. Combined with water quality and quantity, and superimposing opportunity cost, the ecological compensation standards of Minjiang River basin under different property rights were calculated.

Assuming that the upstream has the right to discharge pollutants, if the downstream area wants the upstream area to protect the ecological environment of the basin, the downstream area needs to pay the upstream area for ecological compensation. Compensation values of the downstream area for the ecological and environmental protection investment in the upstream area should not be less than the ecological and environmental service value of the basin. Therefore, the water allocation coefficient of the downstream areas is used to express the functional value of watershed eco-environmental services in this study.

This situation assumes that the upstream and downstream are jointly built and shared, that is, the upstream and downstream areas jointly protect the ecological environment and share the water environment capacity (emission right) of the river basin on the premise that the water quality meets the standard.

When the water quality is better than the standards, σ < 0. The downstream area compensates the upstream area for the improvement of water quality, and the compensation standard is |P|. When the water quality is lower than the standards, σ > 0. The upstream area needs to pay pollution compensation to the downstream. The pollution compensation standard is P and, correspondingly, the ecological compensation standard of the downstream to the upstream area is -P. When the water quality is exactly equal to the standards, σ = 0 (Table 1).

Water quality can be divided into five levels in accordance with the surface water quality standard of China (GB3838-2002) (CSEPB 2002; Li et al. 2021). Water quality targets of the junction sections in Minjiang River basin were selected as class II, III and IV (Environmental quality standards for surface water, China; GB 3838-2002) according to the calculation method. Water quantity data came from the ecological environment department of Fujian Province, and water quality data was from the water quality weekly report of the ecological environment department in Fujian Province. Financial information, GDP and environmental protection investment information for different cities were taken from the Fujian Statistical Yearbook (2015–2019), Sanming Statistical Yearbook (2015–2019), Nanping Statistical Yearbook (2015–2019) and Fuzhou Statistical Yearbook (2015–2019).

Taking the per capita GDP of Fujian Province as a reference, the opportunity cost lost by the upstream region to protect the ecological environment was calculated. At the same time, the direct and indirect costs invested by the upstream region for ecological environment construction and environmental protection in the river basin were obtained through the relevant statistical yearbook. Moreover, total investments for ecological environment construction and environmental protection in the upstream region of the river basin were calculated. The ecological compensation coefficient was calculated based on the fiscal revenue and GDP of the Sanming and Nanping regions from 2015 to 2019, and the water allocation coefficient was calculated according to the water quantity of the junction section and the water consumption of the downstream region. Finally, compensation standards that the downstream should pay to the upstream under the condition of ‘upstream has pollution rights’ were calculated (Table 2).

From 2015 to 2019, the upstream region of Sanming City received compensation from the downstream region of Nanping City, amounting to 2.41–9.36 × 10⁸ Yuan. Because Nanping City is located in the middle reaches of the Minjiang River basin, however, as the beneficiary of ecological and environmental protection in the Minjiang River basin, it also needed to pay 2.41–9.36 × 10⁸ Yuan of ecological compensation to the upstream area of Sanming City. On the other hand, as the payer of ecological environment protection in the river basin, it received ecological compensation from the downstream area of Fuzhou, with compensation costs of 6.78–28.35 × 10⁸ Yuan. The final compensation value of Nanping City was 2.29–18.99 × 10⁸ Yuan. As the beneficiary of ecological and environmental protection in the river basin, Fuzhou in the downstream area should pay 6.78–28.35 × 10⁸ Yuan of ecological compensations to Nanping City.

If there are no pollution discharge rights in the upstream area, Sanming City needs to ensure that the water quality of the Sanming-Nanping junction section meets the standard. At the same time, Nanping City needs to ensure that the water quality of the Nanping-Fuzhou junction section meets the standard. Otherwise, Sanming and Nanping areas need to compensate Nanping City and Fuzhou City according to the actual water quality of the respective junction sections. Water quality targets of the junction sections in the Minjiang River basin were selected as levels II, III and IV. According to formula (5), the values of the upstream area, which should pay corresponding pollution compensation to the downstream area from 2015 to 2019, were calculated. The results show that the compensation values of Sanming and Nanping areas to Nanping and Fuzhou from 2015 to 2019 were each 0.

In this scenario, it was assumed that the upstream and downstream areas are jointly work together and share that is, the upstream and downstream areas jointly protect the ecological environment and share the water environment capacity (emission right) of the basin on the premise that the water quality meets the standard. Similarly, water quality targets of the junction sections in Minjiang River basin were selected as levels II, III and IV. Under the above property right definitions and different water quality conditions, the values of ecological compensation between the upstream and downstream in Minjiang River basin were calculated according to formulas (6) and (7). The calculation results are shown in Table 3.

Under the water quality target of level II, the ecological compensation values that Nanping City needed to pay to Sanming City from 2015 to 2019 were 6.25–10.42 × 10⁸ Yuan. The values that Fuzhou City needed to pay to Nanping City were 12.05–30.45 × 10⁸ Yuan. The final compensation values of Nanping City were 5.80–20.03 × 10⁸ Yuan. Under the water quality target of level III, the ecological compensation values to be paid by Nanping to Sanming from 2015 to 2019 were 11.19–14.35 × 10⁸ Yuan. The values that Fuzhou needed to pay to Nanping City were 20.55–33.26 × 10⁸ Yuan. The final compensation values of Nanping City were 6.28–20.20 × 10⁸ Yuan. Under the water quality target of level IV, the ecological compensation values to be paid by Nanping to Sanming from 2015 to 2019 were 15.18–21.34 × 10⁸ Yuan. The values that Fuzhou needed to pay to Nanping City were 26.13–36.38 × 10⁸ Yuan. The final compensation values of Nanping City were 8.30–20.38 × 10⁸ Yuan.

Sanming City and Nanping City have made efforts to protect the ecological environment of Minjiang River basin, but the economies of upstream areas were not developed. Fuzhou City was the biggest beneficiary of the ecological environment protection in Minjiang River basin, and its economy was more developed. If the upstream region undertakes the responsibility of ecological and environmental protection in the Minjiang River basin, and the downstream does not provide assistance, the expected results of the ecological and environmental protection and construction in the Minjiang River basin will be difficult to achieve. The calculation method of an ecological compensation standard based on the combination of ‘clear property rights, water quality and quantity, and opportunity cost’ was applied in this study. On the one hand, this involved quantifying the contribution of Sanming City and Nanping City in the upstream to the ecological environment protection of Minjiang River basin, and recognizing the efforts made by the upstream to protect the ecological environment of the basin and restrict the development of industries. Enhancing the enthusiasm of upstream areas is of great signficance in protecting the ecological environment. On the other hand, based on the definition of property rights and the conditions of water quality and quantity, the calculation method not only reflected the value of water resources and emission rights, but also considered the benefits of upstream and downstream, which helped to improve the efficient use of resources and the level of social welfare in the river basin.

As typical environmental public goods, rivers have an externality. Sanming City and Nanping City in the upstream, whether protecting the ecological environment of the river basin or arbitrarily discharging untreated (or substandard) sewage, will have an impact on Fuzhou in the lower reaches. Unclear property rights are the main reason for the externality of river basin economic activities. Therefore, this study defined the subject and object of ecological compensation in a river basin through the definition of property rights. It was assumed that the upstream has the right to discharge pollutants. In order to obtain excellent water quality, the downstream wants the upstream to protect the ecological environment, so the downstream needs to pay ecological compensation to the upstream to stimulate the enthusiasm of the upstream to do this. If there are no discharge rights in the upstream, the upstream area needs to ensure that the water quality of the junction sections in the river basin does not affect the downstream. The upstream and downstream areas could then examine the water quality of the junction sections according to the agreed water quality standards. Among these, if the water quality of the junction section is better than the water quality standard set the upstream does not need to compensate, and if it falls below the water quality standard set, the upstream needs to compensate the downstream. The upstream and downstream regions jointly built and shared, and jointly undertook the responsibility of ecological environment protection, and jointly enjoy the rights and benefits of ecological environment in the river basin. The downstream area needs to comprehensively consider the ecological environment protection and water quality of the upstream area, and make a scientific and reasonable ecological compensation. The subject and object of compensation are determined through the definition of property rights. The upstream and downstream areas of the river basin need to be responsible for the ecological environment protection in the region and the water quality of the junction sections. The compensation relationship of the upstream and downstream could be determined according to the ecological environment protection in the region and the water quality of the junction section.

According to the total cost of environmental protection in the upstream area shown in Table 2, the direct and indirect cost of ecological and environmental protection investment in Nanping City were generally higher than those in Sanming City, which provided an ecological and environmental guarantee for the green development and high-quality development of the Minjiang River basin. Calculation results of ecological compensation standards in the Minjiang River basin indicated the amount of ecological compensation which the downstream pay to the upstream shows an upward trend on the whole. The main reason is that the opportunity cost lost to protect the river basin ecological environment in Sanming and Nanping accounted for a large proportion of the total investment, and the opportunity cost showed an increasing trend. Taking the per capita GDP of Fujian Province as a reference, this study explained the efforts made by Sanming and Nanping City in ecological and environmental protection to restrict industrial development. Compared with the whole province, the development level gradually grew. When there were no discharge rights in the upstream area, the water quality targets of the junction sections were selected as level II, III and IV, respectively. The compensation calculation results show that the average annual water quality of Sanming-Nanping and Nanping-Fuzhou junction sections was generally good, and the quality of their sections could meet level II of the water quality standard. Therefore, Sanming and Nanping areas didn't need to pay pollution compensation to the downstream areas of Nanping City and Fuzhou City. In the case of upstream and downstream co-construction and sharing, the value of ecological compensation paid by Nanping to Sanming and Fuzhou to Nanping showed a gradual decreasing trend in the process of improving the water quality targets from level IV to II. Due to the improvement of water quality targets at the junction sections, the water environmental capacity (emission right) of the basin decreases, which was manifested in the gradual decrease of ecological compensation value. During the change of water quality targets from level IV to II, the compensation values finally obtained by Nanping City remained basically stable. Nanping City not only needed to pay ecological compensation to the upstream area of Sanming City, but also received ecological compensation from the downstream area of Fuzhou City. The constraints caused by water quality targets offset each other. Therefore, the final compensation value changed little.

In this study, the water quality weekly reports of junction sections in Minjiang River basin were collected from the ecological environment department of Fujian Province, and the water quality data in the weekly reports were processed as an annual average. The processing results showed that the average annual water quality of Sanming-Nanping and Nanping-Fuzhou junction sections could meet the water quality standard of level II. However, the water quality of some weeks might exceed the water quality standards of level II or III. Therefore, the calculation results of ecological compensation might deviate. This study used great subjective randomness in determining the compensation amount of pollutant factors such as the permanganate index, NH₃-N and TP, which might lead to deviation in the compensation calculation results. Economic development of the upstream areas in the river basin might be restricted by many factors. Opportunity costs were determined in this study only by considering the restriction of the ecological environment protection on the economic development of the upstream areas in the river basin, which exaggerated the restriction of the ecological environment protection in the river basin on the upstream areas. In the process of opportunity cost calculation, the economic development level of the reference area should be equivalent to that of the upstream areas in the river basin, which was difficult to realize in practice. With reference to different regions, the calculation results were also different, which might lead to deviation in the compensation calculation results.

• (1)

  In order to eliminate the externality of social and economic activities in a river basin, the ecological compensation method for a river basin under the joint scenario of ‘clear property rights (water quality and quantity) and Opportunity cost’ was built in this paper. Taking the Minjiang River basin as an example, ecological property rights were considered in three scenarios: ‘upstream has pollution rights’, ‘upstream has no pollution rights’ and ‘upstream and downstream co-construction and sharing’. This paper calculated the ecological compensation standards of the Minjiang River basin under these different property rights.

• (2)

  According to the water quality at the junction sections and the definition of property rights in the upstream and downstream of the river basin, ecological compensation or pollution compensation was judged. Then the proportion of upstream and downstream distribution was determined in accordance with the water allocation coefficient. Finally, the total cost of ecological environment protection in the upstream of the river basin was calculated by superimposing opportunity cost, and the compensation value of the river basin was finally determined. Under this method, it was relatively easy to define property rights, obtain data, and take into account the benefits of upstream and downstream, and the calculation process was relatively simple, which developed and supplemented the traditional ecological compensation method for a river basin.

• (3)

  In order to implement the ecological compensation policy of a river basin, it is necessary to clearly define the ecological environment rights and responsibilities of each compensation participant, and to construct an ecological environment management mechanism of co-construction and sharing. Secondly, a scientific and reasonable ecological compensation standard needed to be established to determine the sharing of ecological environmental benefits and corresponding input costs by considering the factors of water quality and water quantity. Furthermore, in order to promote the implementation of the ecological compensation policy of co-construction and sharing by the upstream and downstream, it is necessary not only to coordinate and manage the ecological environment, but also to change the industrial economic development structure of the upstream, and protect the ecological environment of the river basin.

Conceptualization, Q.R.; methodology, X.L. and F.C.; software, X.L.; formal analysis, Q.R.; investigation, W.C. and Y.L.; resources, Y.Z.; data curation, Y.Z.; writing – original draft preparation, Q.R.; writing – review and editing, Q.R. and F.C.; visualization, Q.R.; supervision, Q.R.; project administration, Y.Z.; funding acquisition, Q.R. All authors have read and agreed to the published version of the manuscript.

This study was financially supported by the Basic Theory Research Project of Philosophy and Social Sciences in Universities of Fujian Province under the Guidance of Marxism (No. JSZM2021056), the Major Project of Fujian Provincial Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era Research Center (No. FJ2021XZZ011), the National Nature Science Foundation of Fujian Province (No. 2020J01306, 2021J01327, 2021J011243).

All relevant data are included in the paper or its Supplementary Information.

The authors declare there is no conflict.