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Payments for Ecosystem Services

(Photo by Philipp Zieger)

The Relevance of Payments for Ecosystem Services (PES) in Beijing

In the city of Beijing, 20 million citizens depend everyday on clean water provided by the city’s main reservoir in Miyun. This quality and quantity of water in the reservoir in turn depends the natural conditions and the influence of humans upstream in water source areas. However, in order to keep the water clean, sacrifices have to be made. Mining, animal husbandry, pesticides or the unsustainable use of forests all degrade the water arriving in Miyun. It makes sense to put constraints on these areas in order to protect the water.

The people in the Miyun watershed, however, are often severely limited in their ability to prosper due to these restrictions. Clearly a service is being delivered by them (the clean water) without receiving compensation for that effort.  Not only has that led to unfavorable relations between city-dwellers and rural people, but also it forces us to consider a more fundamental question: Shouldn’t we pay for the services we get if it impairs the livelihoods of the people providing it?

The idea of payments for ecosystem services have been around for a while. In fact, one of China’s most famous programs, the “Grain for Green” program, used exactly this idea to convince farmers to turn their sloping lands back into forests. Other contemporary examples are REDD+ (Reducing Emissions from Deforestation and Forest Degradation) or Costa Rica’s National PES scheme.

In China specifically the sheer scale under which PES schemes were executed often diminished their effectiveness, at times even failing to provide promised payments altogether.

What Categories of Ecosystem Services are there?

Supporting Services

These are enabling all the other ecosystem services, e.g. nutrient cycling and soil formation only make it possible for plants to grow which in turn will then provide all other services.

Provisioning Services

These are products that are directly obtained from ecosystems, below you find some examples:


Raw Materials

Medicinal Resources


Regulating Services

The benefits here are obtained through the regulation of ecosystem processes. These are the services that in a normal market are often not paid for and therefore represent the traditional target of PES schemes.

Water Purification


Erosion Prevention

Disease Control

Cultural Services

Cultural ecosystem services are obtained through experiencing nature, through spiritual, recreational or aesthetic experiences. The biggest market amongst these service is tourism, specifically eco-tourism.

What does BFS do in the PES area?

BFS is involved in a multitude of projects all aiming to integrate the payment for ecosystem services in a more institutionalized way.

BFS is currently working an IWS (Investment in Watershed Services) project and a new financial mechanism called the Mega-City Water Fund (MWF), which will hopefully be successful in Beijing and can be upscaled for all of China in the future.




Mega-City Water Fund

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