Optimizing payment for ecosystem services in a drinking water source watershed by quantifying the supply and demand...

Payment for ecosystem services (PES) plays a vital role in coordinating the relationship between ecosystem services supply and demand sides in watersheds. The upstream soil retention service brings significant off-site benefits to the downstream stakeholders. To fill gaps in the supply and demand of soil retention services for PES, we developed an approach that combined long-term observation data, hydrological model, and cost-benefit analysis. We applied and demonstrated the approach in a typical drinking water source watershed. By constructing the relationship between water clarity and the demanded trophic state, we identified the demand for soil retention as the suspended sediment concentration ≤4.4 mg L^-1 at a transboundary station. Then, a well-calibrated hydrological model was applied to simulate the downstream sediment reduction under 36 upstream reforestation scenarios. Results showed that cropland reforestation effectively reduced downstream sediment loads by up to 37.8%. However, the efficiency of cropland reforestation for soil retention supply was influenced by its area, slope, and location. The cost-benefit analysis revealed that the feasible sediment reduction was 11,000 t per year, and the market-equilibrium price was 5800 CNY (Chinese Yuan, 7 CNY equaled 1 USD in 2020) per ton. The downstream side should pay 64 million CNY annually for soil retention provided by reforesting at upstream sloping cropland of 8° or above. This study suggested that the approach was helpful for integrating soil retention service supply and demand at a watershed scale to support PES decision-making.