The site

The Songhuaba watershed is located 16 km north of Kunming, the capital city of Yunnan province, China. The 629.80 km2 watershed provides half the drinking water for the 3 million inhabitants of Kunming. Driven by growing demand for agricultural produce in the city, agriculture has intensified over the last few decades and water quality has dramatically deteriorated. The decline in water quality was noted since 2000 in Songhuaba Reservoir, when the overall assessment of water quality following the Chinese national standards was above level 2 but water quality declined to level 3. By 2005, the water quality was rated level  4, which is below the standard indicating minimum safe water quality (level 3). The quick decline in water quality threatened health and safety and affected the sustainable development of Kunming City.

The issues

Local governments relied on land-use planning regulations to address the threat to water quality. However, since most of the watershed was agricultural land, non-point pollution associated with farming practices was ubiquitous. This could not be addressed through the regulations unless restrictions were put on farming, which would directly undermine local livelihoods.

At the same time, local governments had undertaken some ‘top–down’ environmental services’ schemes. Although the schemes were intended to protect the environment, there were some problems: only a single source of funds with low compensation to farmers; a lack of evaluation and market valuation of ecological services; and a more general lack of market mechanisms.

RUPES explored the potential of using rewards for environmental services’ schemes as a way to meet the demand for high quality water while also providing positive incentives for improved land management practices in the watershed. Negotiations between the supply and demand sides needed to be evidence-based, with negotiations conducted in an equitable manner. To achieve this, RUPES supported the collection, analysis and communication of evidence on the impact of land management practices on water quality and quantity in the watershed. To prepare for facilitating negotiations, the team supported studies of farmers’ willingness to accept different forms and levels of rewards . RUPES analyzed the application of chemical fertilizers to different crops, the varying  regional characteristics and evaluated the efficiency of schemes using the SWAT (Soil and Water Assessment Tools) model. Based on the findings, the team produced recommendations for solutions.

Environmental services and the people involved

Environmental services

Increased water quality for domestic and agricultural use

People who provide the services

40 farmers ’groups with 256 members

People who benefit from the services

Urban residents

People who act as intermediaries between the providers and the beneficiaries

Water supply company

Environmental services identified by RUPES in Songhuaba watershed were water quality, water conservation and also flood control. These were managed by different providers for different beneficiaries both locally and downstream in Kunming.  

RUPES found that most pollutants of the watershed were chemical fertilizers that farmers used for vegetables, maize, tobacco and ‘yacon’. The team had two practical suggestions for the local and Kunming governments: first, ban the planting of maize. Nitrogen fertilizer use on vegetables and maize accounts for 67% of nitrogenous pollutants in the watershed, however, the income from maize is the lowest among the products in the watershed: CNY 6270 per hectare. In this context, maize could be the ‘low-hanging fruit’ for eco-compensation implementation, that is, eliminating maize production could reduce by 30.4% the amount of nitrogenous pollutants; the economic loss of eradication of maize could by covered through an environmental rewards’ scheme.  The second suggestion was that vegetables and maize could be replaced by other cash crops which require less fertilizer input but comes out with higher market value. Investment in water purification technology to eliminate pollutants was CNY 23 millions. According to our calculations, if maize and vegetables were replaced by other crops (i.e. tobacco used in this case study), it would cost CNY 23.7 millions, would be 0.7 million less, to compensate local farmers for restricting input of nitrogenous fertilizer and for the cost of labour.

The rewards

The research platform in the Songhuaba watershed allowed multiple stakeholders—from both up- and downstream—to meet to solve problems. The platform included stakeholders’ workshops, at which the scientific evidence was discussed, and the initiation of a pilot rewards for environmental services’ scheme to test improved land management practices. The result was a set of recommendations on preferred reward mechanisms for Kunming City and Yunnan Provincial government.

A case study was carried out to investigate rewards’ mechanisms in Songhuaba watershed. The team assessed different methods of calculating payments, payment standards, ecosystem service functions, and efficiency of different rewards’ scheme practices in the watershed.

The results showed that payment standards calculated using ecosystem services’ values (CNY 26 900/ha) can be used as the upper boundary in any scheme. Nevertheless, the standards calculated merely by opportunity cost were highly variable under the influence of market demands and thus too risky to be used directly as a reference standard. On the other hand, data obtained through questionnaires of farmers’ willingness to accept rewards (CNY 12 800/ha) could serve as a reliable reference for determination of standards. A combination of these two methods could be useful for making better decisions about standards.

Different practices had different efficiency. Among the proposed practices, adjustment of industry structure had the highest efficiency, followed by conversion of sloping croplands to forests, conversion of (flat) croplands to forests, and soil and water protection.

The results suggested that more attention should be paid to the selection of appropriate practices and assessment of their efficiency for a better implementation of rewards for environmental services’ schemes.


Changes in the water quantity and quality of the watershed through a rewards’ mechanism: according to the team’s calculations, suitable compensation should go directly to local farmers who sacrifice their own economic gain by providing ecosystem services. To achieve this, beneficiaries and providers need to be more closely linked and the role of government should be clarified and enhanced.

The rewards’ mechanisms need to be refined, especially, the amount of compensation for market-based  ecosystem services. The team has identified potential providers and beneficiaries of services in the watershed and further work is needed to link them together.

Changes in local farmers’ incomes and livelihoods should be mapped through a further survey, along with the ‘willingness to accept’ of farmers and the sustainability of funding.


  • World Agroforestry Centre China and East Asia Node
  • Center for Mountain Ecosystem Studies, Kunming Institute of Botany, Chinese Academy of Science

The World Agroforestry Centre’s China office has developed strong partnerships with local research institutes, NGOs, and government agencies. Foremost among these is a partnership with the Chinese Academy of Sciences to establish a Center for Mountain Ecosystem Studies, which provides a platform for national and international research, development, and donor organizations to bring resources to bear on upland issues in China.

  • Yunnan University

Yunnan University is one of the largest and most prestigious universities in Yunnan province, China. Its main campuses are located in the provincial capital city of Kunming. It is the only National Key University in the province, having trained over 17 000 specialist professionals in various fields.

Contact for more information: 

Dr Li Yunju,