The Economic Impact of Payments for Water-related Ecosystem Services on Protected Areas: a Synthetic Control Analysis

Payments for Water-Related Ecosystem Services (PWES) are increasingly popular for promoting water ecological conservation, and their impact on development is of considerable interest. This study estimates the economic impact of PWES on protected areas using the synthetic control method. Taking the Middle Route of the South to North Water Diversion Project in China as a case study, we find that the per capita GDP in protected areas increased markedly relative to synthetic control regions, and PWES had a positive economic impact. Additionally, we conducted many placebo tests to verify the validity and robustness of the results. We believe that the main factor responsible for the positive effect lies in developing the ecological-economic industrial system. This study provides a baseline for synthetic control analysis of PWES to compare regions of interest with their counterfactuals. The case study findings provide reference for the economic development of protected areas.