Coordination of interests between upstream and downstream governments in water source areas

Exploration of establishing a robust intergovernmental benefit compensation mechanism for water source areas holds significant importance in promoting regional coordinated development. Taking the Guanting Reservoir basin, a water source area in Beijing, China, as an example, we established an ecological location model with urban water sources as the core by drawing on the concept of spatial circle structure in traditional location theory. Based on this, we proposed the theory of ecological cost of water source land level difference and analyzed the basic composition of ecological cost of water source land. Finally, the differential ecological costs method was used to estimate the ideal horizontal eco-compensation funds between the downstream city of the water source (Beijing) and the upstream city (Zhangjiakou). The results are as follows: (1) the closer to the water source reservoir area and the higher the protection zone level, the greater the contribution of the ecological product value realization and the ecological protection costs to the protection of water resources in the reservoir area. (2) The compensation funds for water source areas are jointly composed of the increment of ecological product value and protection costs. (3) In 2021, the value addition of ecological products in the upstream region was 3.075 billion yuan, and the protection cost was 6.702 billion yuan. After multiplying by the differential adjustment coefficient, the horizontal eco-compensation amount that the upstream cities should receive in 2021 is 4.194 billion yuan. This study theoretically addresses the shortcomings of traditional ecological compensation, which overlooked differences in resource and environmental costs due to variations in ecological functional location. It provides a new perspective for further exploring the role of location theory in addressing inter-governmental interest coordination issues in cross-border water source areas.