Quantifying the Payments for Ecosystem Services among hydrologic units in Zhujiang River Basin, China based on the indicator of Optional Capacity Value

Ecosystem services (ES) are fundamental to human being’s livelihoods, production and survival. However, the spatial mismatch between ES supply and demand is a common phenomenon. Payments for Ecosystem Services (PES) provide a way to promote the complementary advantages and benefits equilibrium between ES supplier and beneficiary. At present, PES is mainly based on the tradeoff between the profit and loss of ecological conservation. The quantifying of PES mainly uses the opportunity cost of ES supplier and follows the principle of additionality, which neglects the benefits that arise from the basic (contrast to additional) ES experienced by ES beneficiary and ignores the rights and interests of ES supplier who supplies the basic ES. To resolve this problem, we proposed that we should set the value of ES experienced by ES beneficiary as the quantitative indicator of PES. Here, we introduced a new indicator (optional capacity value, OCV) to implement this idea. The ES OCV indicates the optional capacity of supporting the total value produced by human being’s economic and social activities provided by the total volume of an ES. In this paper, we calculated the ES OCV of water provision in Zhujiang River Basin (Pearl River Basin), China. Then, we discussed three scenarios of quantifying PES, based on the principles of (1) interests sharing and responsibilities bearing and (2) equal pay for equal work. The results showed that the ES OCV could describe the conditions that water resources in a hydrologic unit not only provide benefits to the hydrologic unit itself, but also provide benefits to downstream hydrologic units, and then could be a quantitative indicator for PES. This research provides a new PES scheme which would promote the coordinated development and ecological conservation among the regions with mismatch between ES supply and demand.

At present, PES is mainly based on the tradeoff between the profit/loss of ES supplier and 42 beneficiary in natural resources exploitation or in ecological conservation  and 43 follows the principle of additionality which means that ES beneficiary only pays for the ecological 44 conservation which could produce additional ES (Wunder, 2015 PES could be user-financed, in which funding comes from the users of the ES, or be 52 government-financed, in which funding comes from a third party (typically the government) 53 Wunder et al., 2008;Wunder, 2015). Theoretically, user-financed PES is more 54 effective and flexible than government-financed PES in a free market (Pagiola and Platais, 2006). 55 Practically, government-financed PES is more cost-efficient than user-financed PES because of 56 transaction cost, especially when the PES program is conducted in a large-scale (Engel et al., 57 2008

Methods 101
The ES value of a vital ES which is indispensable for human being's survival is the optional 102 capacity for supporting the TVPH, which could be calculated by using the product of multiplying 103 the TVPH by the freedom of consumption. In this work, we used the average uncertainty of 104 choosing the ES consumption from its total volume to indicate the freedom of consumption, in 105 which the average uncertainty was described by log base 2 which indicated the uncertainty in a 106 binary decision and was valued in bits (Ulanowicz, 1986). In calculating the OCV of ES spatial 107 subsidy (the ES comes from other regions), we followed the principle of local priority (Eq. 1, 2). 108 In the equations, denotes the local ES OCV in a region; denotes the spatial subsidized ES 111 OCV in a region; denotes the volume of ecosystem service consumed in a region, TVPH 112 denotes the total value produced by human being's economic and social activities.

PES among hydrologic units of Zhujiang River Basin based on the ES OCVs of water provision 155
The ES OCVs of water provision provided and experienced by each hydrologic unit of Zhujiang 156 River Basin provide quantitative indicators for PES among hydrologic units. Following the 157 principle of interests sharing and responsibilities bearing, if there is a water resources protection 158 project in the hydrologic unit of Nanpan-Beipan River with a budget of 3.4508 billion yuan, then 159 the hydrologic units experienced the ES of water provision supplied by the hydrologic unit of 160 Nanpan-Beipan River should apportion this cost based on their ES OCVs (Fig. 2). exporting water resources to it based on their ES OCVs (Fig. 3).

Quantitative indicator for PES 189
We need a new PES scheme that quantifies PES based on the ES value experienced by beneficiary. 190 Traditional PES approaches are based on the tradeoff between the profit/loss of ES supplier and 191 beneficiary in natural resources exploitation or in ecological conservation  and 192 use the ES increment as the reference for PES (Wunder, 2015). That ignores the rights and  (Eq. 1, 2). So, it could quantify the ES value of local services 211 and imported services experienced by a region (Table 1, 2), which provides a quantitative 212 indicator for quantifying PES (Fig. 2, 3, 4). At the same time, it quantifies the ES value of local 213 services and exported services provided by a region (Table 1, 2), which provides a quantitative 214 reference for quantifying PES (Fig. 2, 3, 4). In the new PES scheme, we set regions as accounting 215 units, set ES OCV fluxes among accounting units as indicators for PES, follow the principles of (1) 216 interests sharing and responsibilities bearing and (2) equal pay for equal work, quantify the PES 217 for basic ES (Fig. 2, 3, 4), and then provide quantitative indicators for government-financed PES. provided and experienced by each hydrologic unit as a reference frame, and then followed definite 234 principles to quantify PES. The principle of "interests sharing and responsibilities bearing" means 235 that all ES beneficiaries should pay to the ES supplier using the basic ES OCVs experienced by 236 each hydrologic unit as quantitative indicators (Fig. 2, 4), which achieves the equity of PES 237 among hydrologic units at basic ES level. The principle of "equal pay for equal work" means that 238 a downstream hydrologic unit should pay to upstream hydrologic units, if it pays for local water 239 resources protection program, using the basic ES OCVs provided by each hydrologic unit as 240 quantitative indicators (Fig. 3, 4), which achieves the equity of PES among ES OCVs at basic ES

Approaches of ES valuation 248
As water provision is a vital ES for human being's survival, we described its ES OCV as the 249 optional capacity for supporting the TVPH, calculated its ES OCV by using the product of 250 multiplying the T VPH by the freedom of consumption (Eq. 1, 2) Here, the freedom was evaluated by the average uncertainty of selecting ES consumption from the 259 total volume of this ES. The average uncertainty was described by log base 2 which indicated the 260 uncertainty in a binary decision (Ulanowicz, 1986). If someone believes that another indicator or 261 method could indicate or calculate the average uncertainty more appropriately, he could use that 262 one to replace log base 2 in his study. Of course, this replacement does not change the assessment 263 scheme of ES OCV. The ES OCV in this work indicates the optional capacity for supporting the TVPH, which depends 275 on the level of economic development, the ES consumption and the total ES supply of the region 276 that experience ES (Eq. 1, 2). It could dynamically reflect the ES value experienced by a region, 277 including local services and imported services, and the ES value provided by a region, including 278 local services and exported services (Table 1) We thank Leon C Braat, Li Yongchi, and Li Zhaolei for grateful assistance that helps to improve 296 the manuscript. This research did not receive any specific grant from funding agencies in the 297 public, commercial, or not-for-profit sectors.