This paper assesses residential environment induced preference heterogeneity regarding ecosystem services improvements of a river basin by comparing urban and rural residents’ welfare estimates. In a choice experiment, the ecological improvements are described in terms of several observable ecological indicators set in an experimental design. Given the fact that economic and environmental conditions differ for urban and rural residents in China, the utility they derive from ecological restoration is hypothesized to differ. The urban and rural residents’ survey data were modeled separately using mixed logit models. The results reveal that water quality and water quantity, measured by unit of level improvement and percentage improvement, respectively, hold the highest marginal utility values in all respondents’ models. Urban and rural residents have the same preference regarding expanding soil erosion control areas and landscape improvement. However, they have statistically significant different utility for water quality, water quantity, forest coverage, ecotourism improvements, and reducing soil erosion intensity. Generally, urban residents express a higher implicit price for most of the ecological indicators. The findings imply that policy makers should take existing preference heterogeneity into account in designing ecosystem payment schemes and allocating resources.

Integrated river basin management (IRBM) programs have been launched in most parts of China to ease escalating environmental degradation. Meanwhile, little is known about the benefits from and the support for these programs. This paper presents a case study of the preference heterogeneity for IRBM in the Shiyang River Basin, China, as measured by the Willingness to Pay (WTP), for a set of major restoration attributes. A discrete choice analysis of relevant restoration attributes was conducted. The results based on a sample of 1012 households in the whole basin show that, on average, there is significant support for integrated ecological restoration as indicated by significant WTP for all ecological attributes. However, residential location induced preference heterogeneities are prevalent. Generally, compared to upper-basin residents, middle sub-basin residents have lower mean WTP while lower sub-basin residents express higher mean WTP. The disparity in utility is partially explained by the difference in ecological and socio-economic status of the residents. In conclusion, estimating welfare benefit of IRBM projects based on sample responses from a specific sub-section of the basin only may either understate or overstate the welfare estimate.

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The contribution of irrigation and chemical fertilizer on Chinese agricultural production growth is considerable. Both subsidized fertilizer price and low irrigation water price have encouraged farmers to adopt these modern inputs. However, the inefficient usages practiced by the farmers have exposed the nation to environmental and water pollution. Moreover, the increasing production cost arising from overuse of fertilizer coupled with decreasing soil response to fertilizer application is another issue. The Chinese government has proposed integrated water management plans like irrigation water pricing to regulate the co-existing problems. There are enough evidences that adoption of irrigation can induce adoption of inorganic fertilizer. However, researches on their relationship are scant in areas where inefficient utilization of these inputs is the problem rather than their adoption. Thus, the main objective of this paper was to analyze whether irrigation have a significant impact on fertilizer use decision of farmers in China. Our case study in Shaanxi province along the Weihe River basin based on farm plot level primary data confirmed that fertilizer use have a significant relationship with irrigation. From our analysis using ordinary least square model, we concluded that policies that improve irrigation water efficiency could also have impact on fertilizer use efficiency.

Irrigated agricultural production is the backbone of the Chinese agricultural sector, but the increasing demand for irrigation water, its inefficient utilization and overuse of chemical inputs, accompanied by the short supply of water resources have endangered the nation's agricultural and environmental sustainability. The Chinese government has proposed a water pricing policy with the expectation of improving the efficiency of utilizing irrigation water and fertilizer, to mitigate these problems. With the main objective of this paper being to assess the impact of this policy on water demand and environmental sustainability, a positive mathematical programming model was adopted to simulate different irrigation water pricing scenarios based on farm-level primary data from three irrigation districts along the Weihe River basin. The main parameter for assessing water demand was the change in total water consumption relative to the base year, while change in fertilizer consumption and water demand was determined to evaluate the impact of pricing policy on environment sustainability. According to the results, irrigation water demand and fertilizer consumption were mostly price inelastic to water pricing. This implies that water pricing policy can have only a minor role in regulating the water demand and environment in the region even when the base-year water price is doubled.