Payment for watershed services and the coordination of interests in transboundary rivers: China's Xin'an River Basin Eco-compensation pilot

Through the case of China's Xin'an River Basin Eco-compensation Pilot (XRBEP), this study mobilizes the concept of hydrosocial territories to scrutinize how the watershed conservation behavior of stakeholders in payment for watershed services (PWS) evolves in response to eco-compensation and the coordination of interests. By drawing on the extensive literature on differential games, this study opens up our view of the complex relationship between PWS and the coordination of interests. After comparing the simulated and actual results of XRBEP, this study highlights that the coordination of interests in transboundary PWS can ultimately be socially optimal by reconciling the interests of different administrative territories. Furthermore, designing incentive-compatible coordination mechanisms of interest in transboundary PWS remains challenging, depending on the reconfiguration of PWS hydrosocial territories. Finally, the horizontal eco-compensation as a PES-like application can maximize the supply of watershed services, thus becoming a suboptimal and realistic option for realizing transboundary PWS.