Using Gross Ecosystem Product (GEP) in Payments for Ecosystem Services (Beijing, China)

NatCap has contributed to the design of this project, which uses gross ecosystem product (GEP) accounting to guide payments for ecosystem services in the greater Beijing area. It helps align urban beneficiaries of regulating ecosystem services with their suppliers, mostly rural land stewards in surrounding areas, to promote investments in natural capital.

The Challenge

Urbanization has proceeded rapidly in Beijing, with the large majority of people living in the built-up core. However, this large urban population still depends upon ecosystem services from surrounding landscapes, especially regulating services that form an important “green infrastructure” for the city. Therefore, a new framework is needed to allocate public funds for ecosystem services payments (“eco-compensation”) in order to align rural suppliers with urban beneficiaries.

The Solution

Using GEP, with a focus on regulating services (a category of ecosystem services related to the ways nature regulates water quality, flood management, climate, etc), as the accounting benchmark: eco-compensation is allocated to communities in proportion to their contribution to changes in GEP across districts. This incentivizes ecosystem restoration and other forms of sustainable land management. By using an integrated ecological-economic metric of performance, the disbursement of funds is evidence-based and streamlined. This approach can also promote the “dual growth” of GEP and GDP, securing natural capital while also increasing incomes and enhancing livelihoods.