Urban Water Users’ Willingness to Pay for Ecosystem Services

In 2014, the Beijing Forestry Society conducted a survey (Appendix A) on urban water residents’ knowledge about the Miyun Reservoir Watershed and their willingness to pay for environmental services of the Watershed.

The survey was funded by Forest Trends, an international non-profit organization based in Washington, DC. The survey targeted urban residents in central and suburban districts of Beijing. The respondents were individually interviewed. Due to funding constrains, 300 samples of residents were randomly selected and interviewed but the response rate was 100%. However, 58 questionnaires were incomplete. 242 valid questionnaires were analyzed. 

There were two considerations for sampling residents for the survey. One was to cover all districts of Beijing and take more samples from more populated central districts (downtown Beijing in Figure 1), including Dongcheng, Xicheng, Haidian, Chaoyang, Shijingshan and Fangshan. The other goal was to capture many personal characteristics such as respondents’ age, profession, education, and income that could be indicators of the willingness to make the payment.  

Survey Results

Residents’ demographic factors

The percentage of female and male respondents was similar (Table 2); 67% of respondents were less than 40 years old and 93% had senior high school or university education. Nearly 56% of the respondents had formal Beijing residency. Among those who did not have formal Beijing residency, 57% intended to continue staying in Beijing for five years or more. Most respondents lived in Beijing for more than 10 years and they varied greatly in their professions and employment status. Apart from those with the lowest income (11%), the income groups were represented evenly.

Ninety percent of respondents had made voluntary charitable donations before and 12% of those made donations related to environmental protection.

Table 2. Demographic Information on Survey Respondents.

Residents’ awareness and knowledge about Miyun Reservoir Watershed

Gutman (2003) claims that knowledge of watersheds, awareness of the benefits they bring, as well as the understanding of the threats they are facing help to improve water users’ willingness to pay for watershed conservation.

Urban residents in Beijing are typically unfamiliar with the concept of payments for ecosystem services or eco-compensation. Therefore, before surveying their willingness to pay for ecosystem services in the Miyun Reservoir Watershed, questions were designed to evaluate respondents’ knowledge of the Reservoir and its Watershed and their awareness of existing problems.

The survey results show that only 17% of the respondents were well-informed on the importance of the Miyun Reservoir as a key source of drinking water for their city. Thirty-seven percent of the respondents visited the Reservoir and had some knowledge of its importance. Forty-four percent of respondents had heard of the Reservoir but only had a little knowledge of its importance. Two percent of respondents did not have any knowledge about the Reservoir.

Among the respondents, 67% believed they had benefited from the Reservoir, and 5% of all respondents denied any benefits. Twenty-eight percent of all respondents were unaware of any benefits. However, 241 out of all 242 respondents thought it necessary to conserve the Miyun Reservoir Watershed, with 38% of all respondents rating the need for conservation to be urgent and 29% rating it as very urgent. The only respondent who thought it unnecessary to conserve the Watershed reported no knowledge of the Reservoir at all. For the existing problems of the Miyun Reservoir Watershed (multiple choice), reduced inflow, environmental degradation and degraded water quality were each mentioned by more than 40% of the respondents.

The respondents were very concerned about the quality of their drinking water. Eighty-eight percent of them thought that there were water quality problems with their drinking water and 66% knew that low quality water may cause health problems. Eighty-three percent of respondents had purchased bottled water or water purification equipment to improve the quality of water that they drink. The majority (90%) of respondents believed that the quantity of water supply for Beijing was inadequate. The respondents reported different degrees of water saving if there were to be an increase of water tariff.

Regarding the respondents’ view of government agencies’ work related to the conservation of the water source, 61% were satisfied with their work and 39% thought government agencies had done a poor job.

The reasons (multiple choice) respondents believed to be the causes of poor water quality in the upstream areas included pesticides and chemical pollutants (31% of respondents) and disposal of untreated household sewage (67%), and industrial sewage (82%). Seventeen percent of respondents claimed that they had no knowledge of the causes of water quality problems in the upstream area. Beijing residents were more aware of problems with water in their city than in the contributing watershed and in upstream areas, and were very concerned with the quality of their drinking water. However, some residents might not have an adequate knowledge of the reasons behind the water quality and quantity problems and this requires education and awareness programs.

The respondents’ knowledge about the Miyun Reservoir shaped their understanding of the benefits brought by the Reservoir and threats to its Watershed. Among the respondents who claimed to be well-informed (17% of all respondents), all considered it necessary to conserve the Watershed; 90% and 100% were aware of water quality and quantity problems respectively, and 93% had bought bottled water or water purifiers. Of respondents who claimed some knowledge about the Reservoir (37%), 83% believed they benefited from the Reservoir; 86% reported water quality problems. Of respondents (44%) who claimed a little knowledge of the Reservoir, only 47% believed in benefits from the Reservoir; 90% reported water quality problems. Among the 5 respondents (2% of all respondents) who reported no knowledge of the Reservoir, all reported no knowledge of benefits from it; surprisingly, 4 out of 5 reported water quality problems, which suggests that they have noticed water quality problems at their end without knowing much about their source.

Ninety percent of respondents reported water quantity problems regardless of their knowledge of the Reservoir, this may be due to the fact that TV and other media had played an important role in spreading news about water shortages and urging residents to save water, but media seldom report on the link between such shortages with the Reservoir.

Residents’ willingness to pay for ecosystem services

Nearly 51% percent of the respondents expressed willingness to pay for ecological services of the Miyun Reservoir Watershed. Regarding where the payments should be used (multiple answers allowed), respondents favored increasing water conservation forests in the catchment (61%), reducing pollution in upstream rural areas (66%), and providing subsidies for upstream farmers (30%).

Figure 2. Amount of Payment/person/month (In CNY).

The per capita annual income in Beijing for urban residents was 49,730 CNY in 2014 (Beijing Municipal Statistics Bureau, 2014). According to the Bank of China (2014), 100 CNY dollar equaled to 61.369 USD on December 1^st 2014.

Among those willing to pay, 73% were willing to pay between 0 and 20 CNY per month, 20% were willing to pay between 20.1 CNY and 100 CNY per month, and only 7% were willing to pay more than 100 RMB per month (Figure 2).

Regarding the type of the payment (multiple answers allowed), 21% respondents preferred to pay a tax earmarked for watershed conservation, 26% would pay for increased water tariff and the increase earmarked for watershed conservation, 30% preferred donations (such as to funds or third-party organizations), while 51% selected in-kind voluntary work for watershed conservation.

Taxes provide long-term funding, but collecting taxes is difficult and it would have to involve passing new tax legislation (Gutman, 2003). One concern over taxes and water tariff is how not to affect the urban poor. For all types of payment, government agencies or third-party facilitation is needed.

For the question as to whom the payment shall be made to (multiple answers allowed), 15% of respondents willing to pay preferred the local governments in the Watershed, 45% thought payment should go to a government agency established to manage the Watershed, and 39% preferred to pay the communities or local residents in the upstream Watershed areas.

As for the reasons for not willing to pay for ecosystem services in the Miyun Reservoir Watershed (multiple answers allowed), 34 % of those unwilling to pay reported that their income did not allow them to make such payments, 54% did not trust government agencies or other organizations will wisely manage the funding raised; 54% believed that water-related problems are governments’ responsibility, and 9% did not think they would benefit directly from conservation of the Miyun Reservoir Watershed. Another 8% did not believe that conservation program will achieve expected results, 0.8% thought that watershed conservation should be the responsibility of upstream communities and residents, and 3% believed those who polluted the watershed should pay for its restoration and conservation.

Discussion

Knowledge & willingness to pay

The respondents’ knowledge about the Reservoir and its Watershed had significant impacts on whether they will be willing to pay for ecosystem services in the Watershed and the amount of payment. Among the respondents who claimed to be well-informed, 74% reported a willingness to pay. The figures for respondents with some knowledge, a little knowledge and no knowledge at all were 46%, 47%, and 20% respectively. The average amounts of payment for respondents with most knowledge and some knowledge were higher than that of respondents with a little or no knowledge.

Demographic factors & willingness to pay

Education and the status of Beijing residency also had impacts on whether respondents were willing to pay. The average year of education for those willing to pay and unwilling to pay was 13 and 11, respectively. Among the respondents with formal Beijing residency, 59% were willing to pay. Among the respondents without formal Beijing residency, 41% were willing to pay.

The survey results do not show a very clear relationship between respondents’ income and their willingness to pay for ecosystem services in the Miyun Reservoir Watershed. Further study is needed to find details about how residents’ income, profession and other demographic factors’ influence their willingness to pay for ecosystem services in the Watershed.

Next steps

Involving urban residents from Beijing in payments for ecosystem services in the Miyun Reservoir Watershed through regulatory payments such as tax or water tariff may be challenging in the short term, as introducing watershed conservation tax or a fee in the water tariff may be time-consuming.

Voluntary payments are more preferred by urban citizens. The concerns over voluntary payments to funds or third-party organizations are how to build trust from donors and how to demonstrate links of benefits from watershed conservation practices. The China Mega-City Water Fund initiated by organizations including the Beijing Forestry Society, Forest Trends and IUCN China Office is striving to demonstrate cost-effectiveness of proposed water quality and quantity measures, with the aim that future donors will see how their contributions will be used and what benefits can be brought from their contributions.