This case study report documents and explores a unique way of payment for watershed services in Ningdu county, Jiangxi province, south China. It integrates watershed conservation into development contract.

Meijiang watershed in Ningdu county used to be famous for its heavy soil erosion. The hilly and soft land is very easily eroded with plenty of rainfall of over 1500 mm per year in the region. The upland, with little fertility but heavy soil erosion, is used extensively by local farmers to grow firewood. This land use pattern is both inefficient and vulnerable to soil erosion.

The village committee collected plots of such land, which were held by individual households, into large pieces (more than 7 ha/each), and called for investment to develop navel orange orchards. The county government issued a license to a orchard developer if 1) the orchard is large enough (more than 100 mu, i.e. 6.7 ha); and 2) there is a soil conservation plan, which is subject to inspection by government agencies on a regular basis after it is implemented; and 3) there is a certified land lease contract. The commercial orchard is potentially very profitable so that developers are willing to do it even if they have the obligation of watershed conservation (specified in conservation plan and subject to inspection). Watershed conservation also benefits the orchards directly. In this way, the costs of watershed protection are paid off by the profits of orchard development, not by the government, nor by the downstream.

It is too early to assess the impacts of this orchard development on local livelihood, environment, and hydrological cycles since the large-scale development of orchard began in 2003, only 2 or 3 years ago. But tentative evaluation was done with extensive interview with local government agencies and village farmers. It appeared that:

(1) Soil erosion increased in the first 3 years of orchard development, but would ease afterwards;

(2) Environmental pollution is not pervasive although there applied fertilizers and plenty of pesticides in orchards;

(3) There has not yet been visible change in water flow since orchards are developed widespread.

(4) Lowering of riverbed might be resulted from increasing extraction of river sand rather than reduction in soil erosion.

(5) The land is virtually idled with sparse firewood. Loss of it will not undermine local livelihood. Farmers have not yet got rent but some work for the orchard and earn wages.

This kind of PWS mechanism might be replicable where ①upstream watershed community is dis-encouraged to look to downstream for payment for watershed services; ②both land market and commodity market are not mature; ③watershed conservation benefits the development activities directly.

This kind of win-win opportunity does not always exist anywhere anytime. But such opportunities are far from exhausted especially in developing countries like China.