Effects of social interactions and information bias on the willingness to pay for transboundary basin ecosystem services

Abstract

Payments for watershed ecosystem services are the most important forms of global water environmental protection. Transboundary basin ecological compensation policies in China are mainly based on the central government's appropriation to local governments or transfer payments between local governments. However, watershed ecosystem services face many problems such as the lack of interprovincial horizontal compensation policies and insufficient public participation. Most of China's rivers are distributed in vast rural areas, and the livelihoods of farmers living in these areas are highly dependent on the water environment. Since a watershed usually spans multiple administrative regions, the inconsistency between the natural and administrative boundaries of the river affects the completeness of the ecosystem services' information exchange between the service providers and payers. To promote interprovincial government water management cooperation and spark the farmers' enthusiasm for participating in the payments for watershed ecosystem services, this study examines the mechanism by which social interactions can affect farmers' willingness to pay (WTP) by mitigating the information bias. The results show that information bias plays a mediating role in the effect of social interactions on WTP. Additionally, the cadres/associations' and village-level interactions can effectively reduce the information bias of farmers, thereby increasing their WTP for transboundary basin ecosystem services. Moreover, the intensity of the psychological ownership of the watershed and government credibility have a significant moderating effect on the above-mentioned mechanisms. This study suggests that it is necessary to broaden the source channels of farmers' information on upstream ecological governance, improve the completeness of farmers' information, and curb the negative impact of information bias on WTP. Simultaneously, it is necessary to improve the government credibility and cultivate the farmers' sense of belonging and responsibility toward the watershed.

Keywords: Government credibility; Information bias; Psychological ownership; Social interactions; Transboundary basin ecosystem services; Willingness to pay.