The impact of environmental federalism: An analysis of watershed<scp>eco‐compensation</scp>policy design in China
Jessica C. Teets, Michael C. Gao, Mika Wysocki, Weiru Ye
Abstract
Abstract Scholars and policymakers debate whether centralized environmental governance improves protection. In China, in response to its environmental crisis, the government designed a centralized payment for ecosystems services (PES) policy to alter the costs and benefits for local stakeholders to protect the environment. This study analyses the impact of the 2014 centralization of environmental governance, focusing on the oldest eco‐compensation for watershed services (EWS) model in Zhejiang province. We find that the centralization of EWS led to increased ecosystem protection due to administrative and fiscal incentives; however, the policy faces challenges such as over‐centralization of EWS program development, transboundary negotiation processes, and inadequate monitoring systems that ultimately hinder effective implementation and future innovation. Based on our analysis, we recommend developing a hybrid model with enhanced monitoring by citizens and increasing local autonomy to tailor eco‐system payment programs to local needs. These reforms would improve the design of PES to achieve its promise to incentivize environmental protection.