The Miyun reservoir, 100 miles north of Beijing, is the main water source for the city's more than 20 million inhabitants. Greater agricultural demands and a decline in precipitation, among other factors, have cut the reservoir's output by two-thirds since the 1960s. The water has also become increasingly polluted by fertilizer and sediment run-off, and poses a significant health risk.
Similar conditions shut down Beijing's second largest reservoir in 1997; shortly after, officials began implementing a plan to prevent the same from happening to the Miyun reservoir.
The system follows the successful model established by New York City, in which the government and wealthier downstream consumers provide payouts to upstream farmers, who in turn modify their agricultural practices to improve water conditions.
In the case of China's Paddy Land-to-Dry Land (PLDL) program, farmers are paid to convert their croplands from rice to corn, a solution that reduces both water consumption and pollution. Rice paddies are constantly flooded and are often situated on steep slopes, leading to significant fertilizer and sediment runoff. Corn, meanwhile, requires much less water, and fertilizer is more likely to stay in the soil.
Rice farming is more lucrative than corn for Chinese farmers, but flooded paddies contribute to decreased water quality and quantity.
Improving rural life
The program is indicative of China's recent efforts to improve living conditions for its rural citizens.
"At the top, China sees environmental protection and poverty alleviation as vital to national security," said Gretchen Daily, a biology professor at Stanford and senior co-author on the study. "The challenge is in implementing change. It's amazing that in four short years, the government got everyone growing rice in this area to switch to corn, which greatly improved both water quality and the quantity that reaches city residents downstream."
Farmers earn almost six times more money growing rice than corn, so the government compensated farmers with funds that more than made up the difference. Door-to-door surveys revealed that the compensation program had mostly improved peoples' livelihoods. Farmers were making more money and, because corn is a less time-intensive crop to grow, they had more time to pursue other activities.
Water quality tests showed that fertilizer runoff declined sharply while the quantity available to downstream users in Beijing and surrounding areas increased.
Even with overpaying for corn, the program provides a significant net benefit. The program cost about $1,330 per hectare of farmland to implement, but produced $2,020 per hectare of benefits, calculated as the value of increased water yield and improved water quality. (A hectare is equal to 2.47 acres.)
The researchers calculated that people on both ends of the deal were receiving similar returns: upstream landowners were experiencing a 1.2 benefit-cost ratio and downstream consumers were experiencing a 1.3 benefit-cost ratio. Altogether, the program has generated a 1.5 benefit-cost ratio.
Bigger gains possible
Daily thinks the returns could be better still.
"The work here shows there has been a win-win," said Daily, a senior fellow at the Stanford Woods Institute for the Environment. "But we hope to refine the process to get bigger win-wins, where we improve the monetary investment for people upstream and downstream, and also improve the natural capital underpinning rural livelihoods and services to urban areas."
For instance, there are some areas along the river that contribute too much fertilizer runoff. An unexpected consequence of the payouts was that some farmers, flush with cash, over-fertilized their fields to boost crop yields. The program is now using RIOS, software developed at Stanford by the Natural Capital Project, to pinpoint high-risk areas. In these spots, Daily said, it might make sense to provide farmers additional compensation funds to make even more drastic changes, if doing so would significantly improve the overall water quality picture.
The PLDL could serve as a model for similar programs already underway throughout Latin America and Africa. One of the key drivers of the PLDL's success, Daily said, was the government's willingness to adapt the program on the fly to meet the needs of the farmers. For example, while other compensation schemes have set hard long-term payout limits, when conditions in Miyun changed and farmers said they weren't being fairly compensated, China upped the payments.
Although such projects are typically instituted based on the cold calculus that land remediation is a better long-term solution and less expensive than filtration plants – indeed, such considerations drove the PLDL – Daily said that an added benefit is the opportunity to restore the natural landscape and other benefits that come from it.
Still, despite the many clear positives coming out of the PLDL so far, implementing these programs requires sensitive considerations.
"When is it right to tell people that they've got to change their way of life for the benefit of society?" Daily said. "These are tough political and ethical issues, and it doesn't always make sense for everyone. Yet resource pressures are intensifying everywhere. We've got to find ways of compensating people that are fair, and of opening new opportunities. In most cases, there will be no simple, ideal solution, as we can see with the controversy over New York City's approach. These efforts underway in China today are important experiments with lessons for cities everywhere."