A study of policies and legislation affecting payments for watershed services in China

By employing the basic theoretical paradigms of institutional economics, this paper analyses the institutional arrangements of six major government-led ecological services provision
programmes in China and appraises their effectiveness. It discovers that the high transaction costs associated with public goods have been a basic limiting factor to the provision of these
services. It further shows that, in the Chinese context, the lack of clear property rights arrangements in the original forest resources from which forest ecological services are derived has been a major hindrance to encouraging market-based provision of these services as public goods.