1

Final Report
Submitted to the Asian Development Bank
Water Financing Partnership Facility

By
WWF China
For the
PILOT AND DEMONSTRATION ACTIVITY
Public-Private-Partnership: Development of a PWS Pilot Mechanism in Chishui
Watershed



Xienong Village and Wuma River

MARCH 2013
The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or
policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB
does not guarantee the accuracy of the data included in this paper/presentation and accepts no responsibility for any
consequence of their use. Terminology used may not necessarily be consistent with ADB official terms.

2


TABLE OF CONTENTS

Executive Summary .......................................................................................................... 3
1. Introduction .................................................................................................................. 5
1.1 Project IdentiIication ........................................................................................... 5
1.2 Objectives oI the PDA ......................................................................................... 5
2. PWS in Wuma micro-watershed................................................................................... 6
2.1 Pilot site location ................................................................................................. 6
2.2 The core hydrological problem ............................................................................ 7
2.3 Livelihood assessment in pilot site .................................................................... 17
2.4 Land use patterns ............................................................................................... 23
2.5 Relationship between poverty and environmental degradation: ....................... 24
3. PWS as a probable solution to the core hydrological problem and Unsustainable
Livelihood ....................................................................................................................... 26
3.1 Land use change to address the core hydrological problem at pilot site. .......... 27
3.2 Buyers and sellers: Willingness & capacity to participate in PWS ................... 28
3.3 Service provision and service demand: Value oI the service: contingency
principle ................................................................................................................... 32
3.4 Scaling up the intervention Irom pilot sites ....................................................... 32
4. Project Outcomes and Lessons learned ...................................................................... 33
5. Appendix: Workshop .................................................................................................. 34



3

Executive Summary
WWF is conducting a Pilot and Demonstration Activity (PDA under ADB RETA 6498)
called Pilot Development oI a Mechanism Ior Payment Ior Watershed Services (PWS)
in Chishui Watershed Iunded by Asian Development BankδADB).This PDA was
designed to test a Payment Ior Watershed Services mechanism in Chishui watershed to
address the problem oI deteriorating water quality downstream and improve the
livelihood oI poor upstream Iarmers. The results will be Iurther developed into practical
guidelines Ior the development oI a public-Private-Partnership as an important and
innovative Iinance strategy to both PRC specialized agencies as well as to ADB`s
planning specialists.

Figure 1: Location oI Wuma Micro-Basin within Chishui sub-watershed

This PDA Iocus on Wuma micro-watershed, which is the main branch oI Chishui River
in Renhuai city. The length oI Wuma River is approximately 45 kilometers. The area oI
the Wuma watershed is estimated at 625.14 km
2
. Upstream Iarming communities live at
or below the poverty line. Their land use patterns are most the most part unsustainable
and result in a systematic deterioration oI the ecosystem and its service provision
capacity. As a consequence oI these land use practices, downstream water users about
90° oI them, liquor producing companies- Iace a problem oI decreasing water Ilow
during the dry season. The good quality and stable quantity oI water in the Wuma River

4

are crucial Ior the eIIicient and proIitable operation oI liquor-manuIacturing enterprises
located downstream.

Although there are a multiplicity oI Iactors which might conceivably contribute to
decreasing water volume at Wuma River, this PWS mechanism Iocuses on land use
patterns upstream as other approaches, disciplines or programmes deal with other
probable causes, such as climate change.

Data gathered in the elaboration oI the hydrological assessment corroborates the view oI
the core hydrological problem as decreasing water quantity particularly during the dry
season. The livelihood assessment provides evidence oI the links between poverty, land
use practices and ecosystem deterioration resulting in limited service provision.

Socio-economic and ecological conditions prevailing at Wuma river basin reproduce at
a reduced scale the conIlicts between economic development and nature conservation.
Government and private sector eIIorts to address this contradiction have only
exacerbated it. EIIective control oI water pollution at Chishui river resulted in an
improvement oI its quality Irom category IV to category II. The social cost however
was very high as communities upstream lost a major source oI employment/income
when about 200 paper mills were shut down by Government decree. What was good Ior
the environment was not good Ior livelihood. Soon aIter liquor companies provided an
alternative source oI income.

Equitable Payment Ior Watershed Services, the mechanism tested in this PDA, appears
to be - under current bio-physical, socio-economic and governance conditions - a
superior option to the business as usual approach. Baseline studies also support the view
oI PWS as a more eIIective answer to the core hydrological problem and to poverty
issues Iace by Iarming communities upstream. Land use changes in participating
communities are crucial to conIront the problem oI diminishing water volume
downstream, a growing concern oI liquor corporations. A business partnership between
upstream communities (service providers or sellers) and downstream liquor
corporations (service users or buyers) will assure a long term solution to both the core
hydrological problem and to livelihood issues. Payment mechanisms Irom the part oI
buyers include a variety oI options ranging Irom Iinancing the cost oI land use changes
(i.e. terracing; reIorestation, etc.) to covering opportunity costs Ior upstream
communities. These payments are subjected to the contingency principle: 'buyer pays
as long as seller delivers¨.


5

1. Introduction
This report highlights all major activities undertaken by a research team engaged by
WWF China working on a PDA Iinanced by ADB. The objective oI this project is to
demonstrate, through a Pilot, the Ieasibility oI establishing a PWS mechanism at Wuma
sub-watershed, a major aIIluent oI Chishui River. The main activities perIormed include
hydrological assessment, livelihood assessment and the survey oI the willingness and
capacity to participate in the mechanism by potential service providers and buyers. A
Iinal workshop has conducted sharing all the inIormation about the project and the
results Iound with the stakeholders.
1.1 Project Identification
This Pilot and Demonstration Activities (PDA) designed to test the viability oI an
innovative Iinance mechanism: Payment Ior Watershed Services (PWS) in Chishui
Watershed. The project started on April, 2012 and will Iinish at the end oI March, 2013.

1.2 Objectives of the PDA
z To identiIy and analyze the causes oI unsustainable land use by Iarmers upstream
and their impact on downstream stakeholders. To this eIIect hydrological and
livelihood assessments have been conducted.
z To identiIy, qualiIy and engage potential buyers and sellers oI watershed services in
a business relationship.
z To increase awareness oI the PWS scheme among relevant public and private
stakeholders in the Chishui River Basin.
Expected Results
Outcome
Innovative market-oriented payment mechanism Ior watershed conservation and
livelihood improvement established and replicated in other watersheds.

Outputs
x Wuma pilot established with a lucid statement oI Payment Ior Watershed Services
as a Iinance mechanism
x Research reports on hydrological conditions in the Wuma watershed, on
livelihood in Iarming communities and on water quality/quantity issues Iace by
the liquor industry in Wuma watershed.
x A social economic proIile oI upstream poor Iarming communities showing the
transition Irom subsistence agriculture to sustainable resource management.

6

x A workshop to share results oI the intervention and deIine Iuture steps to key
stakeholders, including government agencies
2. PWS in Wuma micro-watershed
2.1 Pilot site location
Figure 2. Chishui Sub-River Basin within Yangtze Watershed

This PDA Iocus on Wuma watershed, which is the main branch oI Chishui River in
Renhuai city. The Wuma River originates Irom the town oI Changgang -southeast oI
Renhuai city- Ilows through Tanchang, Wuma, Luban to the west, into Chishui River in
the town oI Maoba (See Figs.1 and 2) The overall length oI Wuma River is
approximately 45 kilometers. The area oI the Wuma watershed is estimated at 625.14
km
2
.






7


Table 2-1 Towns and Villages in Wuma River Basin
Towns in Wuma
River Basin
Villages in Wuma
Town Village Groups in Xienong Village
Wuma Erhe
Changgang Sanyuan
Luban Hongjun
Maoba Xienong Long Tangba Ma Jiapo;
Jiaotong Gao; Shancha; Chen Jiagou
Bai Yangtun; Chang Huitu; San
Jiaotang ;Xienong; Ya Zitai
Longli
Yukong ;Tunshan
The site selected as the pilot area selected is Long Tangba Village Group, one oI the
twelve villages in Xienong Village which is part oI the Wuma Town. (See Table 2.1
above)
2.2 The core hydrological problem
The hydrological assessment has identiIied the core problem Iaced by the downstream
water users. This initial step is crucial to properly design a course oI action amenable to
address the problem. This exploratory review allows Ior the deIinition oI potential
watershed services Ior which the demand side is willing to pay. The general aim oI the
assessment is to look Ior trends as well as Ior causal relationships between the core
hydrological problem and land use practices within the catchment. The importance oI
deIining the core problem should not be underestimated.

The core hydrological problem oI the Wuma micro-basin is the decline oI water
quantity. Because oI the timely intervention oI the Renhuai government in 2009, the
water quality oI Wuma reached Class II standard. At present, the quality oI water in
Wuma River is not a major problem Ior the potential service buyers.
2.2.1 Key Water Users: water supply and demand
The main water users in the downstream area oI Wuma River are liquor enterprises. The
total annual water consumption in 2010 was about 99.78 million m
3
, which included
29.2 million m
3
used by Maotai Distillery CO., LTD, 66.8m
3
used by other liquor
enterprises
1
and 3.78 million m
3
was used Ior domestic consumption
2
at Wuma Town

1 Data source: Irom The Report of the Pollution Source Census of Gui:hou Province, Guizhou
Environment Protection Bureau, 2010. Comprehensive water consumption in liquor making is 480m
3
/ton;
and the liquor producing volume reaches 200,000 t in 2010.
2 Domestic water consumption: 0.30m
3
/day/person; the population oI Wuma in 2010 was 35155
(Renhuai Government Report 2011).

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(domestic consumption takes 3.8° oI the total water consumption). The potential
watershed services buyers are liquor enterprises located downstream.


Figure 3: Wuma Watershed: Liquor Companies and pilot site

2.2.2 Water Runoff and Flow
Decreasing water quantity during dry periods is evidenced by variations in water runoII
and Ilow oI Chuishui River at Maotai Hydrological Station in recent decades. During
the dry seasons (October to March), the average flow decreased Irom 78.17m
3
/s in
1960s to 49.96 m
3
/s

in 2009 (See Table 2-2, and Fig 2-1).

Table 2-2 Average Flow of Chishui River at Maotai Hydrological Station (m
3
/s)
Periods 1960-1969 1970-1979 1980-1989 1990-1999 2000-2009
Average Flow:
Dry Season
78.17 58.64 60.23 56.78 49.96
Liquor enterprises
Wuma Watershed

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Average Flow:
Wet Season
151.71 155.94 151.95 156.69 137.34
Source. Recoras from Maotai Hyarological Station


Data source. Recoras from Maotai Hyarological Station
Fig 2-1Average Flow of Chishui River at Maotai Hydrological Station

As Iar as Runoff at Maotai Hydrological Station is concerned there is a decrease during
both dry seasons (Irom 1.23 billion m
3
in 1960s to 0.79 billion m
3
in 2009) as well as in
the wet season showing a decline Irom 2.39 billion m
3
to 2.17 billion m
3
(See Table
2-3and Fig 2-2). The decrease during the dry season is in the order oI 35° while in the
wet season is 9°. The gap between wet and dry seasons in 1960 is 1.16 billion m
3
and
in the 2009 increases to 1.38 billion m
3
.

Table 2-3 Average Runoff of Chishui River. Unit: billion m
3
Period 1960-1969 1970-1979 1980-1989 1990-1999 2000-2009
RunoII Rainy Season 2.39 2.46 2.40 2.47 2.17
RunoII Dry Season 1.23 0.92 0.95 0.90 0.79
Data source. Recoras from Maotai Hyarological Station


0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
Change of Average Flow of Chishui
RiverBetween Every 10 Years (m
3
/s)
Average Flow in Dry
Season
Average Flow in Rainy
Season

10


Fig 2-2 Runoff of Chishui River at Maotai Hydrological Station Unit: 10
8
m
3
Data source. Recoras from Maotai Hyarological Station

The quantity oI water oI Chishui River in the area Irom Maotai to Xijiu has been
decreasing in the period Irom 1960 to 2009 both during the rainy as well as during the
dry seasons. This decrease however is particularly noticeable during the dry seasons.

2.2.3 Water supply and demand for the liquor enterprises in the Watershed
According to statistics Irom Renhuai Government, the liquor yield increased Irom 80
thousand tons in 2004 to 200 thousand tons in 2011. Water required Ior liquor
producing also increased Irom 38.4 million m
3
to 96 million m
3
Ior the same period.


Data source. Renhui Government Report, 2012.
Fig 2-3 The Liquor Output and Water Consumption in Recent Years
0.00
0.50
1.00
1.50
2.00
2.50
3.00
1960-1969 1970-1979 1980-1989 1990-1999 2000-2009
Change of Runoff of Chishui River Between
Every 10 Years( billion m
3
)
Runoff of Chishuiin Rainy
Season
Runoff of Chishui in Dry
Season

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We can see (Fig.2-3) that both water consumption and liquor output increased sharply
Irom 2009 to the present. Moreover, the TwelIth Plan oI Renhuai City indicates that the
output oI liquor production will reach 500 thousand tons in 2015. Water required to
produce this amount oI is expected to reach 240 million m
3
in 2015.
2.2.4 The Deficit of Water in the Area of Maotai to Xijiu
Data monitored at Maotai Hydrological Station, shows a deIicit in water resource in the
area oI Maotai to Xijiu. The annual Ecological Water Requirement
3
Irom Chishui River
at Maotai section is 2.99 billion m
3
, which includes 1.73 billion m
3
in Ilood season
(April to September) and 1.26 billion m
3
in dry season (October to March). But the data
measured at Maotai Hydrological Station reveals that: the annual runoII oI Maotai river
section is 3.251 billion m
3
, which includes 2.162 billion m
3
in Ilood season (April to
September) and the 1.089 billion m
3
in dry season (October to March) (see Table 2-4).
The data Ior the year 2011 shows that: only 261 million m
3
oI runoII in Maotai areas is
available Ior a whole year. In the dry season, the deIicit oI water is 171 million m
3
.

Table 2-4 Comparison between Ecological Water Requirement and Monitoring
Data of Maotai Hydrological Station (2011) Unit: billion m
3
Whole
Year
Flood Season (April
to September)
Dry Season
(October to March)
Water Requirement 2.99 1.73 1.26
Monitoring Data at Maotai
Hydrological Station(2011)
3.251 2.162 1.089
Available Water Quantity oI
Maotai Section
0.261 0.432 -0.171
Data source: Irom Chishui River Basin Comprehensive Planning (2011) edited by
Yangtze River Water Resources Committee.
Data collected indicates:
1. Water quantity measured by changes in runoII and Ilood is decreasing in
Chishui river.
2. This decrease has been documented using 40 years oI recorded evidence at

3
Ecological Water Requirement includes the basic flow, water requirement for sediment transfer, fishes and water
consumption by evaporation of lakes or everglades. And the data sourced from Chishui River Basin Comprehensive
Planning (2011) edited by Yangtze River Water Resources Committee.

12

Maotai Hydrological Station.
3. According to the data this decrease is particularly noticeable during the dry
season.
4. Water supply is thereIore insuIIicient to meet current demands by industrial
water users downstream (liquor companies) who are also the main water users.
2.2.5 Impact of the water problem on Liquor Enterprises
The main water users downstream oI Wuma River are liquor enterprises. These
enterprises take water directly Irom Chishui River in the area oI Maotai, where Wuma
River has great impact on the water used by liquor-manuIacturing enterprises located in
that area. At the right bank oI Chishui River and close to Maotai Town, Wuma River,
springing Irom Jingba and Mushiwo Village oI Changgang Town oI Renhuai City,
Ilows through Wuma Town and Maoba Town and Iinally runs into Chishui River at
Aokou Village (reIer to Figure 3). The estuary oI Wuma River is only 13 km away Irom
the water intake oI Maotai Distillery Co., Ltd., which means the quality and quantity oI
the river will directly aIIect the liquor production oI Maotai and other liquor enterprises
in Maotai Town. ThereIore, Wuma River appears to be the tributary with the largest
inIluence on the quality and quantity oI water used by liquor-producing enterprises in
Maotai Town.
Importance of Liquor Enterprises
Renhuai city houses 60° oI all Iamous liquor producing companies in China. There are
about 143 companies operating downstream oI Wuma river basin producing more than
2000 brands oI liquor. Their output Ior 2009 was 100.000 tons with yearly sales oI
12.70 billion RMB. These enterprises employ about 40.000 persons Irom the area. They
comprise 90° oI the total local industrial output. Representatives Irom Renhuai liquor
industry enterprises such as Maotai Group, Guowujian, YunIeng, Guotai and Jiuguijiu
Group, expressed their concern about decreasing water quantity. The liquor enterprises
have indicated that the lowering oI water supply is already impacting normal production.
The water supply in the area Irom Maotai Town to Xijiu Town is woeIully inadequate
during dry season. This results in the decrease oI water storage capability, which leads
in turn to limitations in the water in-taking the liquor enterprises.






13


2.2.6 Cause of the problem: Land use upstream
Causes Ior decreasing water runoII may include a variety oI Iactors Irom natural
4
to
anthropogenic. For purposes oI this PDA the pilot will Iocus on human activities
undertaken upstream impacting negatively the ecosystem`s service production which
beneIits downstream water users. SpeciIically this pilot will Iocus on two Iactors:
deIorestation and cultivation in steep slopes. The combined accumulated eIIect oI these
practices is an increase in erosion and sedimentation. Erosion impacts the Iiltering and
storage capacity oI the soil. In addition in recent decades, rapid social and economic
development has seriously impacted the ecosystem in the upper stream. In Chishui
River Basin Ior example, the Iorest coverage rate decreased Irom 35° in 1950 to 21°
to day. This represents 10.09 m
3
/s loss oI average Ilow during the dry season
5
.
The size oI Wuma River Basin (Table 2-5) is 51029.14 hectares, oI which the area oI
arable land is 14056.4 hectares, (27.55° oI the total land); Iorest land is 22062.08
hectares, or 43.23°; and construction land is 1090.99 hectares, (2.14°.) From data in
the Tables (table 2-5 & 2-6) below we can draw the Iollowing observations regarding
land use patterns along Wuma River Basin:

1. The Iarming area in slopes with over 25 degrees oI inclination accounts Ior
53.49° oI total sloping area, and 35.07° oI total area oI dry land. The
proportion oI high steep slopes or over 25 degrees oI inclination by town are:
Changgang Town: 43.19°; Luban Town: 55.80°; Wuma Town: 82.27° and,
Maoba Town 45.33° respectively; It can be seen that proportions oI
cultivations in steep slopes (over 25 degrees) are higher in Wuma Town than in
the other towns.

2. The percentage oI Iorest cover within the river basin is low. The Iorest land
covers 16,678.25 Hectares
6
in Wuma river basin, taking up 32.68° oI the
whole land. The Iollowing Table (2-5) indicates the percentage oI Iorest land in
each county.


4 The precipitation, according to the data Irom Guizhou Meteorological Bureau, decreased Irom 274.73mm in 1970
to 262.95 mm in 2000s. The average temperature changed Irom 9.5ć in 1970s to 10.1ć in 2000s. Both the
temperature and precipitation changed little between decade-intervals.
5 Data sourced Irom Chishui River Basin Comprehensive Planning (2011) edited by Yangtze River Water Resources
Committee.
6
The data is Irom the interpretation oI the remote sensing image oI Renhuai, which is Irom National Administration
oI Surveying, Mapping and Geo inIormation.

14


Table 2-5 Current Land Use in Wuma River Watershed (2009) Unit: Hectare
Soil types and Percentage
Changgang
Town
Luban
Town
Wuma
Town
Maoba
Town
Total land 11424.59 12437.11 12821.52 14256.52
Arable land 3110.63 3841.74 4394.48 3445.63
Forest land
7
5547.17 6349.24 6281.38 8186.01
The Arable land proportion
oI the total land (°)
27.23 30.89 34.27 24.17
The Forest land proportion
oI the total land (°)
48.55 51.05 48.99 57.42
Source: Overall Planning of Wuma(2006-2020), eaitea by Lana ana Resources Bureau
of Renhuai, 2010.
Table 2-6 Slopes of Wuma River Watershed (2009) (Unit: Hectare)
Items
Changgang
Town
Luban
Town
Wuma
Town
Maoba
Town
Total land 11424.59 12437.11 12821.52 14256.52
Sloping arable land 1876.06 2492.37 1090.46 2178.55
arable land˚25° 810.20 1390.74 897.07 987.55
The proportion oI sloping
arable land oI the total land
(°)
16.42 20.04 8.50 15.28
The proportion oI arable land
˚25°oI the sloping land (°)
43.19 55.80 82.27 45.33
Source: Overall Planning of Wuma(2006-2020), eaitea by Lana ana Resources Bureau
of Renhuai, 2010.
Soil Erosion and Sedimentation
8
According to research conducted by Renhuai City Rocky DesertiIication Control
Planning, the volume oI soil erosion in Chishui River watershed is one oI the highest
along the Yangtze river. The volume oI soil erosion around Renhuai city is 3000

7
The Iorest land includes the shrub land, sparse land and etc, in which some cannot be used to calculate the Iorest
coverage rate, so, the data oI Iorest land is bigger than the Iorest coverage rate.
8
The data oI soil erosion and sediments are Irom Maotai Hydrological Station and the Renhuai City Rocky
Desertification Control Planning. Land and Resources Bureau oI Renhuai, 2005

15

tons/km
2
āper year. The volume oI erosion reaches 8000 tons/km
2
āper year in sloping
Iarmland, which is higher than the average level oI Guizhou province. According to the
monitoring data oI Maotai, Erlangba and Chishui hydrologic station, the average
sediment concentration is 0.9 kg/m
3
, with annual sediment discharge oI over 200,000
tons with over 98° oI the discharge occurring during Ilood season (April to September).
Erosion and sedimentation impact both water quantity and water quality. These impacts
are diIIerentiated along the watershed. Thus, erosion upstream decreases the amount oI
top soil preventing the 'sponge¨ eIIect oI the soil. That is, lowered capture capacity
during the rainy season results in lower water storage capacity to be released during the
dry season. Consequently, less water available downstream during the dry season.
Sediment concentration and the capacity Ior Iiltering upstream impact water quality
downstream particularly during the rainy season. The demand Ior water by the liquor
companies is mainly in the dry season and sediment accumulation is adequately
controlled using Iiltering techniques. Consequently the Iocus oI this PDA regarding
erosion/sedimentation is on its impact upon changes in water quantity.

Governance Issues: problems associated with a segmented approach
At the end oI 1990s, Governments both Provincial and local began implementing the
policy oI 'Returning Farmland to Forest¨. As a consequence oI this policy the
environment showed some improvement. However, because oI limited Iinancial support
to implement this policy, and the single plant (bamboos) with low short term economic
beneIits, Iarmers did not take proper care oI these plants. And even under proper care, it
takes a long period oI time (about 10-15 years) to become a mature Iorest with adequate
water conservation capacity. Some oI the newly planted trees were cut down to plant
other crops with higher and Iaster economic returns Ior poor Iarmers. Understandably,
short term economic beneIits prevailed over long term water conservation practices.
UnconIirmed reports Irom local villagers indicated as the main reason Ior this Iailure
the inadequacy oI the soil to grow bamboo successIully in the area.

There was in addition poor planning Irom the part oI the government agencies in charge
to implement this policy. Bamboo was planted to provide a source oI income to Iarmers
who could sell bamboo as raw material Ior paper production to the local paper mills.
However, shortly aIter the bamboo programme was launched the government shut down
all paper mills in order to cut down chemical contamination oI the water oI Wuma river.

In addition to the problems oI deIorestation and the impractical attempts to solve them
Irom the part oI the government, there is the Iact that there are still large amounts oI
Iarming in slopes over 25 degrees, which need to be returned to Iorestry in the

16

watershed. Cultivation in steep slopes Ior subsistence agriculture is an old practice
among poor Iarmers in the water basin. When liquor companies negotiated with Iarmers
the planting and buying oI sorghum they (the Iarmers) did not hesitate to enter into the
agreement. The problem was that the only available lands to plant sorghum were steep
slopes, some with an inclination above 25 degrees. This land use added signiIicantly to
the decrease water Iiltering capacity oI the soil as well as the loss oI the soil natural
water storage capacity. These practices contributed to lower the water Ilow downstream
particularly during the dry season.



Figure 5: Steep Slope farmland in Wuma River Basin














17

2.3 Livelihood assessment in pilot site

Figure 6: Xienong Village Diagram
2.3.1 Pilot Site: Long Tangba Village Group
Long Tangba is one oI 12 Village Groups within the jurisdiction oI Xie`nong Village
which in turn is 1 oI 7 villages in Wuma Town. (see Table 2-1). This Village Group
meets the conditions as a suitable location Ior the pilot testing oI the PWS mechanism.

According to the hydrological study, the Town oI Wuma is the only one out oI the 4
towns in the river basin whose territory Ialls entirely within the boundaries oI Wuma
River watershed. It is also on the midstream oI Wuma River. Other towns such as
Changgang Town, where Wuma River originates, takes only a small portion oI the
watershed. As Ior Maoba Town and Luban Town, Wuma River only runs through the
boundary oI these two towns beIore merging into Chishui River.



18


Figure 7 Farmland in slopes in Wuma River Basin
In addition, excessive reclamation in Xienong Village oI Wuma Town is more
pronounced than in other villages. Because the Iarmland is limited to serve the needs oI
a growing population, more than 80° oI the dry land over 25 degrees is reclaimed as
Iarmland. Forest cover is destroyed lowering the water conservation capacity and,
leading to Irequent droughts and Iloods seriously aIIecting the stable Ilow oI water in
Wuma River especially during the dry season when the downstream liquor enterprises
need water the most.
2.3.2 Pilot site in context: addressing conservation and development issues
The area selected as a pilot to test the PWS mechanism is a micro-cosmos oI the present
day PRC. It contains in a signiIicantly smaller scale the conIlicts and the dynamics
generated to address them and hopeIully, solve them. China is the second largest
economy in the world. It is also the second country (aIter India) with the poorest people
in the world. Since 1978 about 600 million persons have been liIted out oI poverty.
According to the 12
th
-Iive years plan, the government will make every eIIort to address
deep social imbalances, most oI them in the rural Iarming areas like the site selected Ior

19

this PDA.
Figure 8 :Xienong Village in Wuma Watershed
At the time when this Report was being written the National People`s Congress met to
elect the new Head oI State, premier, top judge and chieI procurator. ReIlecting upon
this key election, Mo Yuchuan an administrative law proIessor at Renmin University oI
China declared: 'The new leaders may have to learn the technique oI balancing
development with other issues such as the environment and peoples livelihoods¨ (China
Daily February 25, 2013). This view coincides Iully with the conceptual Ioundation
upon which we propose the Payments Ior Watershed Services mechanism. This pilot,
one oI many coordinated by WWF in various global sites seeks to harmonize social
capital with natural and Iinance capital. To restore the symmetry in the relationship
between policies directed at alleviating poverty and those aimed at protecting the
environment. Our initiative aims at contributing to the eIIectiveness oI China`s 'Outline

20

for Development-orientea Poverty Reauction for Chinas Rural Areas (2011-2020)` As
more than 90 ° oI impoverished people live in remote mountainous areas and about
one third oI the rural population oI Guizhou province continues to be in poverty
according to Wu Tan, Deputy Director oI the Poverty Alleviation and Development
OIIice oI Guizhou Province.
The inIormation presented below proIiles the livelihood oI poor Iarmers which is also
the Iocus oI China`s Governmental eIIorts.
2.3.3 Demographics in Long Tangba Village group
The inIormation that Iollows presented in tabular Iorm has been collected Irom
interviews conducted with a sample oI 60 heads oI households in Long Tangba Village
Group (population 116 households).

Table 2-7 Long Tangba Village Group: Population by Gender and Age 2013 (N÷60 households)
Gender Age Groups
Male Female 0-7 8-18 19-30 31-45 46-60 Above 60
Head 60 0 0 0 0 21 22 17
Spouse 0 57 0 0 0 24 22 11
Children
1-2 60 45 6 22 34 7 0 0
3-4 15 6 6 22 22 5 2 0
Others 5 20 0 0 12 5 2 6
Total 140 128 12 44 68 62 48 34

It is interesting to notice that the average number oI children (2.12) is higher than the
one child policy. The age group with the highest number oI people is the 19-30 group
with 68 persons accounting Ior 25° oI the total. This is Iollowed by the age group 31 to
45 with 62 persons or 23° oI the total. These two groups ages 19 to 45 in Iact account
Ior 48° almost halI oI the total population in the sample. We are dealing with a
relatively 'young population¨.

Educational Level
In General terms, the educational level is adequate as only 5° Iall under the category
'illiterate¨. Among these however, women (spouses) represent 73°, while the category
'Head oI household¨ represent only 13°. At the other end oI the education continuum
(higher education), there are no women in this category while 3 men are included. The
overall picture is consistent with a rural educational proIile whereby women have
signiIicant less Iormal education than men and children have more years oI Iormal

21

education than parents (26 children with education above high school compared with
only 3 parents).

Table 2-8 Long Tangba Village: Educational Level 2013 (N÷60)
Illiterate Primary school Junior high school Above high school Total
Head 2 29 26 3 60
Spouse 11 36 10 0 57
Children 8* 41 51 26 126
Others 3 6 15 1 25
Total 24 112 102 30 268
Note: * Children Irom 0-7 do not go to school

2.3.4 Social-economic profile
Tables '2-9¨ and '2-10¨ show the distribution oI the sample according to main
occupation. In Table 2-9, we have opted Ior a basic dichotomy with 'Iarming¨ and
'non-Iarming¨ as the main categories. Table '2-10¨ shows the distribution oI income
according to occupation.

Table 2-9. Long Tangba Village Group Occupation 2013 (N=60)
Farming
Non-farming *
Labour Students Other
Head 34 24 0 2
Spouse 51 4 0 2
Children 7 54 52 13
Others 6 14 0 5
Total 98 96 52 22
* Non-farming incluaes long-term working outsiae the Jillage, Seasonal working
outsiae the village, local temporary workers ana township enterprises employee.

A signiIicant number oI males (Head oI household) work outside Iarming. We do not
have at this moment more detailed inIormation regarding this category thus we can
present but tentative conclusions. Whether this occupation is Iull time or part time,
continuous or temporary, it represents 40° oI the sample. As Iar as women are
concerned however a signiIicant majority (92.7°) works in Iarming. Among children
almost the totality does not work in Iarming as they are either studying or working in
'non-Iarming¨ categories or both.

22

Table 2-10 Long Tangba Village Group . Average Income 2013 (N=60)
Farming Non-farming Income per person
Yearly Income (RMB)
1601(258.23
dollars)
3312(534.2
dollars)
4913(792.42 dollars)

The average income Ior 'non-Iarming¨ activities is twice as much the income Ior
Iarming activities. This distribution is also consistent with the rural-urban divide and the
remuneration scale. However, most persons who perIorm non-Iarming work outside the
community do not contribute signiIicantly to the Iamily income because they have to
support themselves outside the community which takes most oI their income.
Table 2-11 Long Tangba Village Group Average expenses 2013 (N=60)
Expenses
Farming
Production
Expenses(RMB)
Non-production expenses(RMB)
Total
Daily
living
expenses Education
Medical
Expenses Others
Average
expenses per
person per year
211.32 (34.1
USD)
2316.98
(373.70
USD)
1124.91
(181.44
USD)
901.51
(145.40
USD)
382.64
(61.72
USD)
4937.36
(796.35
USD)
Note:
1. Farming production expenses includes seeds, Iertilizer and Iarming tools purchase;
2. Daily living expenses include Iood, clothes, water, communication, etc costs.
Compared with the average income in Long Tangba Group the total average expenses
per person ( 796.35 dollars) is higher than the average yearly income per capita ( 792.42
dollars), Table 2-11 indicates that people spend less money in Iarming production
(34.10 dollars) than on 'non-production¨ expenses including daily expenses, education,
medical expenses and others. This could be partially explained by the Iact that most
Iarmers who sell sorghum to liquor enterprises also receive agricultural inputs as part oI
the compensation package thus lowering the cost oI agricultural production.

All in all however we can clearly see the picture oI poverty associated with the
livelihood oI the community.




23

Some conclusions
1. The population included in this PDA is relatively young. The age group 19-45
represents almost halI the total population in the sample (48°)
2. The average number oI children per Iamily is more than twice the established
policy oI one child per couple.
3. 100° oI 'heads oI households¨ are males.
4. Years oI schooling is relatively high with a good number oI children under the
category 'above¨ high school.
5. The illiteracy rate is low (5°) still much higher than the national rate.
6. There are however more women illiterate than men.
7. Concerning income generating activities a signiIicant number oI males either
derive their entire income or part oI it- Irom non-Iarming occupations.
8. Women on the other hand work mostly in Iarming activities.
9. Income however is signiIicantly higher (almost twice as much) among
non-Iarming activities than among Iarming activities.
10. Expenses are higher than incomes.
11. This inIormation must be seen in context. Guizhou is the poorest Province in
China with a GDP per capita income oI USD 2,541 ranked 31 out oI 31
Provinces. The Iigure Ior China is US 5.432 (China Statistical OIIice 2011).
Regarding literacy, Guizhou ranks 29 out oI 31 Provinces with 8.74° oI the
population oI 15 years old and over who cannot read or write. The rate Ior
China is 0.73 (UNESCO 2009).
This inIormation will be very useIul when establishing negotiations regarding land use
changes as women are the ones who work the land although have Iewer Iormal
qualiIications. Men on the other hand work a signiIicant amount oI time outside Iarming
and produce twice as much income. The youth are almost totally either studying or
working on non-Iarming occupations.

Payment Ior watershed services is a mechanism with a good potential to address the
questions oI rural poverty and environmental protection in the context oI current
governmental initiatives particularly regarding rural poverty. Against this contextual
background this pilot test acquires added signiIicance as an innovative Iinance
mechanism which places a market value in conservation.
2.4 Land use patterns
Longtangba Community is situated at the Ilood plain, between the Iirst terrace and
second terrace along the river. Although the quality oI the soil around the community is

24

relatively suitable Ior agriculture the pronounced mountain Ieatures and the broken
terrain limit the size oI arable land. A priority crop Ior the community is sorghum, with
a small amount oI corn and rice.
Table 2-12 Long Tangba Village Land use by area and crops
Arable land (ha) Non-Arable
land (ha)
Total
(ha)
Arable slope land˄ha˅
sorghum corn others Total Woo
d
land
Total ·25
degree
s
_25
degrees
Total
38.93
(80°)
4.87
(10°)
4.87
(10°)
48.67
(48°)
53.3 53.33
(52°)
102 6
(20°)
24
(80°)
30
(62°)
SelI-consu
mption
- all all - - - - - - -
Market all - - - - - - - - -
Source: Data is Irom Xienong Village Committee

2.5 Relationship between poverty and environmental degradation:
1. The majority oI land (52°) in the community is non-arable or unsuited Ior
agricultural production.

2. A signiIicant part oI the arable land (80°) is used to plant sorghum as the only cash
crop the Iarmers can use to generate income.

3. The totality oI the production oI sorghum is sold in the market or delivered to liquor
companies.

4. About 20° oI the arable land is used to produce crops Ior selI-consumption. Food
security or Iood autonomy is questionable.

5. 80° oI crops are in slope terrain with an inclination greater than 25 degrees. This is
not only an illegal use oI land but a strong contributor to land degradation with
decreased soil Iiltering/storage capacity.

6. Farmers have limited options to generate a living, let along to produce sustainable
livelihoods. InsuIIicient land, most oI it unsuitable Ior agricultural production
Iorces Iarmers to contravene legal regulations and to damage the ecosystem. A

25

signiIicant portion oI their income generating crops are located in terrains with an
inclination oI 25 degrees or more.

7. LiIe among poor Iarming communities remain caught in a vicious circle oI poverty
and ecosystem deterioration, one contributing to the other. Within a system oI social
and economic exclusion their livelihood can only be realized by impacting the
environment negatively and, the more degraded the ecosystem is, the more
pronounced their poverty.

8. Long Tangba Community is surrounded by mountains with limited amount oI
arable land. Agricultural production is limited and villagers have to reclaim barren
hills, which leads to destruction oI Iorest cover. Although the
'returning-Iarmland-to-bamboo-Iorest policy¨ was implemented Irom 2003 to 2005,
poor bamboo growth and no short term economic beneIits Iorced about 20° oI the
returned land to go back to crop plantation, resulting in deIorestation, steep slope
cultivation and Iurther destruction oI Iorest cover.

9. On slopes and even steep slopes, Iarmers are driven by the economic beneIit
associated with the sale oI sorghum to the liquor producing companies. This crop
needs plowing the land each year, which results in a single Iarming season and poor
water conservation capacity. Because oI Iarming in steep slopes, increasing rainIall
in rainy season causes more surIace runoII and more soil erosion. Also long-term
use oI chemical Iertilizers can cause water pollution. Such unsustainable land use
patterns lead to the destruction oI the ecosystem, limit the possibility oI economic
development and impact negatively downstream areas.

10. Clearly this is the land use pattern that must be changed iI the issue oI decreasing
water volume is to be addressed eIIectively. It is also the Iramework within which
PWS will be tested in terms oI its Ieasibility to deliver what is required to tackle
simultaneously issues oI poverty and ecosystem degradation.









26


3. PWS as a probable solution to the core hydrological problemand Unsustainable
Livelihood
Payments Ior Ecosystem Services are not always the best available option to deal with a
conservation/development problem. And, when they are, they seldom solve completely
the problem once and Ior all. There might be better options available. This is the reason
why we have established a robust baseline which allowed Ior the testing oI the
suitability and Ieasibility oI the PWS mechanism. Based on the work conducted on this
PDA, we make the Iollowing Iindings:

1. By analyzing the cause (upstream) and impact (downstream) oI the core
hydrological problem we conclude that the 'business as usual scenario¨ (b.a.u.) is
not desirable Ior either upstream Iarmers or downstream liquor companies. The
status quo means continuous livelihood deterioration Ior poor Iarming communities,
continuous ecosystem degradation and less volume oI water than the required
amount by the liquor companies.

2. Representatives Irom Liquor enterprises (including Moutai group), Guo Wujian,
Yun Feng, Huan Xing, Diao Yutai, Guo Wei, Huai Zhuang, Heng Xing, Luo
Guoyan, etc, representing the environmental protection department oI diIIerent
liquor enterprises downstream expressed their concern about decreasing water
quantity. It is reported that Irom October, 2010 to September 2011, the drought oI
Chishui River resulted in over 100 oI the small liquor companies Iailing to conduct
production as usual with loss oI over RMB 1 billion (16.07million dollars). The big
liquor companies had to increase costs to ensure normal production. The water
supply in the area Irom Maotai Town to Xijiu Town is woeIully inadequate during
dry season. All representatives above Irom the liquor enterprises have expressed
their interests in Iinding ways to improve the environment oI Wuma river watershed
and to strengthen the river`s capacity to produce a stable supply oI water during the
dry season.

3. Villagers in Long Tangba community oI Xienong Village worked in the paper mills
until 2009. As previously mentioned, the local government banned all the paper
mills in 2009 in order to control the pollution to Wuma River. This resulted in
cutting oII the main source oI income Ior the villagers. This in turn led to changing
economic activities to cash crops such as sorghum Ior their livelihood. Because the

27

arable land in Longtangba community oI Xienong Village is limited, villagers
choose to plant more and more sorghum on slope land above 25 degrees oI
inclination as a way to improve their income.

4. It Iollows that changes must be introduced. Among several causes Ior the problem,
human action has been identiIied as the most probable. Unsustainable land practices
(deIorestation and steep slope cultivation) are thereIore the targets Ior change.

5. EIIicient options must be explored to change land use. Given the conditions oI the
terrain and the impact oI unsustainable land use, reIorestation and erosion/sediment
control actions will most likely be the most appropriate Iorm oI interventions.

6. According to knowledge gained at other sites under similar circumstances (WWF
Global Equitable Payment Ior Watershed Services (EPWS) Programme), the most
eIIicient Ior oI intervention should be terracing and agro-Iorestry. This modality
needs to be studied thoroughly as part oI the next phase oI this project.

7. In addition, identiIied potential service providers (sellers) and service users (buyers),
their willingness and capacity to participate in a PWS mechanism must be
established.

8. Valuation oI the service must be conducted and the possibility oI scaling-up the
intervention must also be ascertained. These are steps to be undertaken as part oI
the next phase.
3.1 Land use change to address the core hydrological problem at pilot site.
Forest cover must be restored and erosion/sedimentation must be controlled. These must
be the outcomes required to address the hydrological problem. ReIorestation must be
explored taking into account some basic Iacts:
x Native species must be used
x Selection oI species must consider the type oI soil and the need to protect it Irom
continuous erosion. Soil water Iiltering/storage capacity must be restored. Root
consistency and leave shape must be taken into account.
Terracing is an eIIicient- although expensive- option to control erosion- sedimentation.
This should be used initially in terrain with not too pronounced slopes (below 25

28

degrees). When possible, land with inclination oI 25 degrees or more should not be used
Ior agriculture. Should there be no more land available Ior agriculture, alternative
income generations activities must be thoroughly explored.

3.2 Buyers and sellers: Willingness & capacity to participate in PWS
Having selected the most eIIective and Ieasible mode oI intervention, its cost and
Iinancing must be established. This requires the preparation oI a cost-beneIit analysis
Ior both buyers and sellers. At the end oI this process participating communities duly
represented and participating liquor companies should be in a capacity to enter into
some type oI Iormal agreement consistent with Chinese legislation to this eIIect.
Identification of service providers and service users
For this PDA, potential buyers include: the liquor enterprises oI mid-stream
(represented by Moutai distillery and the Association oI Liquor Producing Companies).
And potential sellers: Xienong Village in Wuma Town upstream. The hydrological
service is deIined as the provision oI a stable Ilow oI water particularly during the dry
season. In order to deliver such service, the ecosystem has to be restored through the
changing oI unsustainable land use patterns upstream. Water users downstream i.e.
liquor companies-who will beneIit Ior such service- will pay a mutually agreed upon
price Ior as long as the service is provided (the contingency principle).

A representative group including the village head and villagers Irom Village Committee
in Longtangba group oI Xienong Villages indicated during the research, their
willingness to change present land use patterns to improve water quantity provided such
changes generated economic gains.

This expression oI interest has been Iormalized into a document at a meeting during the
last Workshop held at Guilong Hotel (Guiyang) on March 1st, 2013. In document
representatives Irom Liquor enterprises including GUIZHOU JUNFENG JIUYE
CO,.LTD. and GUIZHOU GUOBAO JIUYE CO,.LTD in representation oI service
buyers, and members oI the Community in Xienong Village representing service sellers,
maniIested their interests in participating in the development oI the PWS mechanism. In
addition, The Renhuai Environmental Protection Association oI Guizhou Province, a
Government entity, is willing to supervise and coordinate Iuture activities leading to the
establishment oI a partnership between participating liquor enterprises and communities.
The signed version oI the Expression oI the Interest can be Iound in Appendix.


29


Assessing Awareness and Willingness to participate in PWS among farmers in
Long Tangba Community
Initial consultation with a sample oI 60 Iarmers showed that the majority (58) oI those
surveyed had a 'strong¨ willingness oI participating in the PWS programme. In contrast,
their environmental awareness was 'average¨ (48).

Table 3-1 Long Tangba Village Awareness and Willingness 2013 (N÷60)
Strong Average Weak
Environmental awareness
9
4 48 8
Willingness oI participating in PWS
10
58 2 0

The variables entered to gather this inIormation however were not Iully or clearly
operationalized. Recorded answers then were deemed insuIIicient to provide valid and
reliable evidence oI the Iarmers` willingness and capacity to enter into the programme.
Thus, Iurther research was conducted in the community in order to supplement initial
inIormation on 'willingness¨ and 'capacity¨ to enter into the PWS mechanism.
Additional data was collected Irom a sub-sample oI 25 Iarmers including 8 Iemales in
Long Tangba Community. The main Iindings are presented below, but given that
women are under-represented in this sample, the Iindings may be biased.
Economic Profile of Respondents
Table 3-2 Proportion oI crops in Steep slope land above 25 degrees
All 3/4 1/2 1/4
Land in steep slope land
above 25 degrees 0 10 (40°) 13 (52°) 2 (8°)

23 out oI 25 or 92° oI Iarmers in the sample have more than halI oI their crops (52°)
in steep slope terrains (land above 25 degrees). Sorghum is the principal crop and most
oI it (84°) is planted in terrains with an inclination higher than 25 degrees (Table 3-3)

9
Strong means people know environmental problems and know how to protect environment. Average means they
know the environmental problems and want to protect environment. Weak means people do not care
environmental protection.
10
Strong means people have will to change their land use. Average means people do not care whether change land
use or not. Weak means people do not want to change their land use.

30

All respondents know about the liquor enterprises as the totality oI their sorghum
production is sold to them (Table 3-4).

Table 3-3 Main crops planted in steep slope land above 25 degrees

Sorghum Corn
Planting in steep slope land
above 25 degrees(Mostly)
21 (84°) 4 (16°)

Table 3-4 Production sales
Know liquor enterprises Sell sorghum
Yes 25 25
No 0 0
Environmental Awareness
Table 3-5 Knowledge oI environmental consequences oI planting steep slope
above 25 degrees
Knowledge oI
environmental
impact oI planting
in steep slope above
25 degrees
Yes
NO


Know
very well
Partially
known
Hard to say Total
Responds
1 18 (7 women) 2 21
4 (1 woman)
Note:
1. The environmental consequences oI planting in sloping terrain include soil erosion, sedimentation,
potential pollution caused by chemicals and soil Iertility decrease.
2. 'Know very well¨ means people can identiIy more than two consequences, 'Partially known¨
means people can identity one consequence.







31



Table 3-6 Awareness oI land use and water quantity

Water
Quantity
Increase
Water
Quantity
decrease
No Change
Don't
know
Awareness oI impact oI steep
slope cultivation and water
quantity
2(1woman) 6 (1 woman) 8(2women) 9(4women)

21 out oI 25 participants (84°) indicated that they know that planting in sloping terrain
can have environmental consequences. Among those 21 respondents, 19 (90°) can
identiIy at least one negative environment consequences such as erosion, sedimentation,
potential pollution caused by chemicals and soil Iertility decrease (Table 3-5). However,
in terms oI the relationship between having crops in sloping terrain above 25 degrees
and quantity oI water downstream, only 6 respondents (24°) realized that this practice
can cause a decrease in water quantity (Table 3-6).

Data collected suggest that Iarmers have a 'general¨ knowledge about environmental
impact oI associated with land use. They lack however knowledge about the speciIic
relationship between their land uses and its impact on quantity oI water.

Table 3-7 Knowledge oI eco-compensation and Payment oI Watershed Service

Heard oI :
Eco-compensation
Heard oI Payment Ior
Watershed Services
Yes-know the contents 0 0
Yes- don't know the real
contents 14 1
No 11 (8 women) 24

Regarding knowledge about PWS only one respondent indicated having heard about
PWS but lacks knowledge about its real meaning. In contrast, 14 out oI 25 respondents
(56°) know about 'Eco-compensation¨ (Government Environmental Conservation
Programme) Irom watching TV or Irom word oI mouth. They have however no
knowledge as to its contents. All the women in the sample had no knowledge oI either

32

eco-compensation or PWS (Table 3-7).
Attitude and willingness toward land use change
All respondents would like to change the location oI their crops away Irom steep slope
land over 25 degrees. Practically all oI them however (24 out oI 25 respondents)
qualiIied their answer indicating that there are no other spaces Ior them to move to.
Thus, moving away Irom cultivation in such terrain (steep slopes) means no cultivation
at all. The Iinancial impact oI this change is a severe, unacceptable reduction oI income.

24 out oI 25 participants would like the liquor enterprises to give them compensation
Ior an eventual change in the use oI land. Compensation includes either alternative
income generating occupations or the liquor companies paying the equivalent oI their
opportunity costs. Villagers have indicated repeatedly during the survey their
willingness to change their current land use in Iavor oI Iorest (Iruits) as well as
non-Iarming income generating activities such as constructing an aquatic amusement
park, aquaculture or eco-tourism. They realize however how are hard will be to
implement these possibilities given the absence oI both technical and Iinancial support.

3.3 Service provision and service demand: Value of the service: contingency
principle
Should this pilot be concluded successIully subsequent phases should include the
valuation oI the service. There are several methodologies to this eIIect. Based on the
cost-beneIit analysis and including Iigures pertaining to the opportunity costs, several
scenarios are produced and presented to representatives oI buyers and sellers Ior their
review and eventual agreement as to the cost oI the service as well as conditions Ior
service delivery and payment.
3.4 Scaling up the intervention from pilot sites
This PDA is a pilot test. A deliberate selection has been made oI a location which
represents conditions prevailing in the larger watershed in a signiIicant smaller scale. In
order to run a Iull PWS mechanism the pilot intervention must be scaled-up. The actual
dimensions oI a new intervention are to be established according to the needs oI the
potential buyer (Ior both volume oI water and sorghum) and the conditions oI the seller.
A new cost-beneIit analysis must be conducted to veriIy the Iinancial Ieasibility oI the
intervention under a larger scale.



33


4. Project Outcomes and Lessons learned
Project outcomes
The project resulted in two assessments (a livelihoods assessment and a hydrological
assessment), a survey oI willingness/capacity to participate in a PWS scheme, and an
Expression oI Interest Irom the local government, potential buyers and potential sellers
to participate in a PWS.
Based on these results, WWF will continue its PWS activities in the Wuma watershed.
Next steps include a valuation oI services.
Lessons Learnt
1. Gathering oI inIormation and raising awareness oIten requires more time than
originally allocated.
2. Proposed staII should have the necessary skill sets to perIorm the assigned tasks
required under a contract.
3. It is better to propose tasks and results that can deIinitely be achieved, and then over
deliver.
4. A PWS is impacted by more than anthropological variables, and these external
Iorces, such as climate change, need to be taken into account in developing a PWS.
5. Gender needs to be considered in survey design and data collection; particularly
when the majority oI actors involved in the proposed activity are Iemale.


34

5. Appendix: Workshop
1. Agenda

Workshop on Payment of Watershed
Service Pilot Project in Chishui River Basin
Organizers: WWF, Environmental Protection Department
of Guizhou
Sponsor: Asian Development Bank
1
st
Mar. 2013
Guiyang, Guizhou Province, China




35

Agenda of the Workshop on Payment of Watershed Service Pilot Project in
Chishui River Basin
Date: Mar. 1
st
2013
Venue: Guilong Hotel (Guiyang Ruijing South road NO. 372), Guiyang, Guizhou Province
Time Activity Facilitator
Feb. 28
th
2013 Registration

1
st
Mar
AM
9:00-9:15
Workshop kick-oII and participants
introduction
Zheng Mingjie
9:15-9:25
Opening Speech
Zhai Chunbao, Head oI Protection
Department oI Guizhou
9:25-9:55
Introduction oI PES works in China
Lei Gang, Director oI WWF Freshwater
Programme
9:55-10:15 TEA-COFFEE Break/ Photos

10:15-10:45
Lessons Learned Irom the EPWS Global
Programme
Julio Tresierra, EPWS Global coordinator


Zheng Mingjie
10:45-11:15
Introduction oI Ecological Compensation
Policy oI Renhuai Government
Ma Xiaobin, Director oI Renhuai
Environmental Protection Bureau
11:15-11:25
Q/A
11:25-13:30 LUNCH BREAK
1
st
Mar
PM
13:30-14:00
Research Result: Hydrological Survey
Dan Wenhong, Guizhou Normal University
Lei Gang
14:00-14:30
Research Result: Community Survey
Ren Xiaodong, Guizhou Normal University
14:30-14:45
Problems Iaced and Willingness oI
Conducting PWS Programme by Moutai
Company
The representative oI the Liquor Enterprise
14:45-15:00
Problems Iaced and Willingness oI
Conducting PWS Programme
The representative oI the Community
15:00-15:15
Q/A

36

15:15-15:30
TEA-COFFEE BREAK
15:30-16:35
Expression oI Interest signing ceremony
Lei Gang
16:35-17:05
Closing and Iollow up discussion
17:30
DINNER

Mar. 2
nd
2013
Leaving Guiyang



37

2 Expression of Interest
Representatives Irom Liquor enterprises including GUIZHOU JUNFENG JIUYE CO,.LTD.
and GUIZHOU GUOBAO JIUYE CO,.LTD and the Community in Xienong Village both
expressed their interests oI participating in the PWS project. Renhuai Environmental
Protection Association oI Guizhou Province is willing to supervise and coordinate the Iurther
works oI liquor enterprises and communities in the next stages as the third party. The
Expression oI Interest can be seen as Iollows


38


Scanned copy of the original Expression of Interest

39


40


41


42

Translate Version

Expression of Interest

Party A: Co., Ltd.(whose registered oIIice is in Renhuai City,
Guizhou Province)

Party B: Xienong Village, Wuma Township, Renhuai City, Guizhou Province

Witness: Renhuai Environmental Protection Association oI Guizhou


Within the Iramework oI the Memorandum Ior Cooperation between World Wild Fund
Ior Nature (WWF) and Guizhou Provincial Environmental Protection Department, and
under the guidance and supervision oI the Renhuai Environmental Protection
Association oI Guizhou, the two parties have reached an agreement Ior engaging in
Payment Ior Watershed Services mechanism at Chishui River Basin. This agreement
aims at working together Ior the protection oI the environment oI the Chishui River
Basin, promoting the sustainable development oI the Wuma River (a branch oI the
Chishui River) and surrounding communities` as well as providing a steady volume oI
high quality water Ior liquor enterprises located in Renhuai City, Chishui River basin.

1. As an ecological branch oI the Yangtze River, the Chishui River is oI great
signiIicance Ior the protection oI biodiversity along the upper reaches oI the Yangtze
River. At the same time it is closely related to the sustainable development oI liquor
enterprises with their industrial chains and communities, playing an important role on
the coordinated development oI urban and rural areas and achieving common prosperity.
Because Wuma River is a major tributary oI the Chishui River, the development oI
communities along the Wuma River has a signiIicant impact on the overall ecological
integrity oI - Chishui River.

2. Focusing on the restoration oI the Wuma River Basin, governments at all levels have

43

carried out a series oI restoration projects together with the communities and enterprises.
These projects have had major impacts by eliminating the serious point source pollution
and popularizing organic Iarming so as to decrease the eIIect oI non-point source
pollution. To Iurther promote the water quality and water resources reserve capacity in
the Wuma River Basin, to improve the basin`s ability to conserve soil and water,
especially advance water conservation capacity during the dry season, the two sides are
willing and ready to tackle the upcoming challenges water hand in hand, and adopt
eIIective measures to support the implementation oI environmental improvement
project in the basin.

3. Both parties agree, under the supervision and coordination oI the Renhuai
Environmental Protection Association oI Guizhou and the support oI WWF, to support
the pilot project oI Payment Ior Watershed Service supported by Asian Development
Bank (ADB), and vigorously participate in the Iurther assessment, implementation,
collaboration and communication, as well as in the practice and promotion oI the
project.


Representative oI Party A: Representative oI Party B


Witness Irom Renhuai Environmental Protection Association oI Guizhou:

March, 1st, 2013


44

3 Workshop Photos
All the participants in the workshop
Presentation by Julio for sharing lesson learnt of global EPWS

45



Communication Materials shared with stakeholders



Hydrological Assessment of Wuma River













WWF CHINA
Guizhou Normal University
March, 2013


Contents

1. The Background of the Program ................................................................................ 3
2. The Core Hydrological Problem ................................................................................ 3
2.1 Key Water Users : water supply and demand ................................................... 3
2.2 Causes of the Key Hydrological Problem ......................................................... 7
3. PWS Pilot Project in Wuma River Watershed ........................................................... 8
3.1 Relationship between Wuma River and Liquor Enterprises ............................. 8
3.2 Importance of Liquor Enterprises ..................................................................... 9
4. Introduction to Wuma River Watershed: Geographic Location ................................. 9
4.1 Land Use Patterns in Wuma River Watershed ................................................ 10
5. Hydrological Analysis of Wuma River .................................................................... 12
5.1 Total Volume of Water Resources ................................................................... 12
5.2 Changing Runoff Trends ................................................................................. 13
5.3 Water Consumption and the Available Volume ............................................... 14
5.4 Causes of the Decreased Volume .................................................................... 14
6. Selection of Xienong Village of Wuma Town as the PWS pilot site ....................... 15
6.1 Land Use Patterns and the Impacts on Water quantity ................................... 15
6.2 PWS as Possible Solution to the Problem....................................................... 16
7. Conclusion ............................................................................................................... 16
Appendix: ..................................................................................................................... 18

1. The Background of the Program
The overall goal of the PDA under ADB RETA 6498 is to test the viability of a Payment for
Watershed Services (PWS) mechanism in Chishui watershed designed so as to address deteriorating
ecosystems and improve the livelihood of poor upstream residents. At present, both Wuma and
Chishui River show problems of runoff decreasing during the dry season. Unsustainable land use by
upstream farmers is a key anthropogenic factor influencing a decrease in the volume of water.
2. The Core Hydrological Problem
The core hydrological problem of the basin is the decline of water quantity. Because of the timely
intervention
Ś
of the Renhuai government in 2009, the water quality of Wuma reached Class II
standard. This level of water quality can be used in liquor production.
2.1 Key Water Users: water supply and demand
Research has shown that the main water users in the downstream area of Wuma River are liquor
enterprises. The total annual water consumption in 2010 was about 99.78 million m
3
, which included
29.2 million m
3
used by Maotai Distillery CO., LTD, 66.8 m
3
used by other liquor enterprises
ĸ
and
3.78 million m
3
was used for domestic consumption
Ĺ
at Wuma Town (the domestic consumption
takes 3.8% of the total water consumption). The major water users are liquor enterprises in
downstream.
2.1.1 Water Runoff and Flow
Decreasing water quantity during dry periods is evidenced by variations in water runoff and flow of
Chuishui River at Maotai Hydrological Station in recent decades. During the dry seasons (October to
March), the average flow decreased from 78.17m
3
/s in 1960s to 49.96 m
3
/s in 2009 (See Table 2-1,
and Fig 2-1).

Table 2-1 Average Flow of Chishui River at Maotai Hydrological Station (Unit: m
3
/s)
Periods 1960-1969 1970-1979 1980-1989 1990-1999 2000-2009
Average Flow in
Dry Season
78.17 58.64 60.23 56.78 49.96
Average Flow in
Rainy Season
151.71 155.94 151.95 156.69 137.34
Data source: Records from Maotai Hydrological Station

ķ
The Renhuai government shut down the coal mines and paper mills along Wuma River.
ĸ Data source: fromThe Report of the Pollution Source Census of Guizhou Province, Guizhou Environment Protection Bureau, 2010.
Comprehensive water consumption in liquor making is 480m
3
/ton; and the liquor producing volume reaches 200,000 t in 2010.
Ĺ Domestic water consumption: 0.30m
3
/day/person; the population of Wuma in 2010 was 35155 (Renhuai Government Report
2011).

Figure 2-1Average Flow of Chishui River at Maotai Hydrological Station (Unit: m
3
/s)
Data source: Records from Maotai Hydrological Station
Runoff at Maotai Hydrological Station in dry seasons decreased from 1.23 billion m
3
in 1960s to
0.79 billion m
3
in 2009 (See Table 2-2and Fig 2-2).

Table 2-2 Average Runoff of Chishui River. Unit: billion m
3
Period 1960-1969 1970-1979 1980-1989 1990-1999 2000-2009
Runoff of Chishuii Rainy Season 2.39 2.46 2.40 2.47 2.17
Runoff of Chishui in Dry Season 1.23 0.92 0.95 0.90 0.79
Data source: Records from Maotai Hydrological Station

Data source: Records from Maotai Hydrological Station
Figure 2-2 Runoff of Chishui River at Maotai Hydrological Station Unit billion m
3


The data shows that the quantity of water of Chishui River in the area from Maotai to Xijiu has been
decreasing in the period from 1960 to 2009, especially during the dry seasons.
2.1.2 Water supply and demand for the liquor enterprises in the Watershed
According to statistics from Renhuai Government, the liquor yield increased from 80 thousand tons
in 2004 to 200 thousand tons in 2011. Water required for liquor producing also increased d from 38.4
million m
3
to 96 million m
3
for the same period (See Fig 2-3).

Data source: Renhui Government Report, 2012.
Figure 2-3 The Liquor Output and Water Consumption in Recent years

We can see (Fig.2-3) that both water consumption and liquor output increased sharply from 2009 to
the present. Moreover, the Twelfth Plan of Renhuai City indicates that the output of liquor
production will reach 500 thousand tons in 2015. Water required to produce this amount of is
expected to reach 240 million m
3
in 2015.
2.1.3 The Deficit of Water in the Area of Maotai to Xijiu
Data monitored at Maotai Hydrological Station, shows a deficit in water resource in the area of
Maotai to Xijiu. The annual Ecological Water Requirement
ŝ
from Chishui River at Maotai section is
2.99 billion m
3
, which includes 1.73 billion m
3
in flood season (April to September) and 1.26 billion
m
3
in dry season (October to March). But the data measured at Maotai Hydrological Station reveals
that: the annual runoff of Maotai river section is 3.251 billion m
3
, which includes 2.162 billion m
3
in
flood season (April to September) and the 1.089 billion m
3
in dry season (October to March) (refer to
Table 2-3). The data shows that: only 261 million m
3
of runoff in Maotai areas is available for a
whole year. In the dry season, the deficit of water is 171 million m
3
in 2011.

Table 2-3 Comparison between Ecological Water Requirement and Monitoring Data of Maotai Hydrological
Station Unit: billion m
3
(2011)
Whole
Year
Flood Season (April to
September)
Dry Season (October to
March)
Ecological Water Requirement 2.99 1.73 1.26
Monitoring Data at Maotai Hydrological
Station(2011)
3.251 2.162 1.089
Available Water Quantity of Maotai
Section
0.261 0.432 -0.171
Data source: from Chishui River Basin Comprehensive Planning (2011) edited by Yangtze River Water Resources
Committee.
2.1.4 Soil Erosion and Sediments
Ļ

According to the research from Renhuai City Rocky Desertification Control Planning, the volume of
soil erosion in Chishui River is one of the highest along the Yangtze river. The volume of soil
erosion around Renhuai city is 3000 t/km
2
·per year. The volume of erosion area reaches 8000
t/km
2
·per year in sloping farmland, which is higher than the average level of Guizhou province.
According to the monitoring data of Maotai, Erlangba and Chishui hydrologic station, the average
sediment concentration is 0.9 kg/m
3
, with annual sediment discharge of over 200,000 tons with over
98% of the discharge occurring during flood season (April to September).

Although soil erosion is a serious problem in the Chishui River Basin, it has nevertheless little
impacts on liquor enterprises. This is because liquor producing companies use water mostly during
the dry season (September to April) according to the producing technique requirements of Maotai
flavour liquor, when the volume of of sediments is rather low (2%). Furthermore, the volume of
sediments produced in this period can be easily filtrated by simple processing. Thus for the purposes

ĺ
Ecological Water Requirement includes the basic flow, water requirement for sediment transfer, fishes and water consumption by
evaporation of lakes or everglades. And the data sourced fromChishui River Basin Comprehensive Planning (2011) edited by Yangtze
River Water Resources Committee.
Ļ
The data of soil erosion and sediments are fromMaotai Hydrological Station and theRenhuai City Rocky Desertification Control
Planning. Land and Resources Bureau of Renhuai, 2005
of this PDA sedimentation deposits have limited and/or manageable consequences for potential water
buyers, the liquor companies. Soil erosion and sediments pose a serious environmental problem but
are of limited consequence for liquor enterprises.
2.2 Causes of the Key Hydrological Problem
Causes for decreasing water runoff may include a variety of factors from natural
ļ
(precipitation
refer to Table 2-4) to anthropogenic. For purposes of this PDA the pilot will focus on human
activities undertaken upstream impacting negatively the ecosystem’s service production which
benefits downstream water users. Although partially anthropogenic, it will not include climate
change assessments. In recent decades, rapid social and economic development have seriously
impacted the ecosystem in the upper stream. This has resulted in a loss of the natural filtering
capacity of the soil and a decreased water soil-storage/conservation capacity. In Chishui River Basin
for example, the forest coverage rate decreased from 35% in 1950 to 21% to day. This represents
10.09 m
3
/s loss of average flow during the dry season
Š
. At the end of 1990s, the governments from
provincial to local began to implement the policy of “Returning Farmland to Forest”. The
environment showed some improvement. However, because of limited financial support, and the
single plant (bamboos) with low short term economic benefits, farmers did not take proper care of
these plants. And even under proper care, it takes a long period of time (about 10-15 years) to
become a mature forest with adequate water conservation capacity. Some of the newly planted trees
were cut down to plant other crops with higher and faster economic returns for the poor farmers.
Understandably short term economic benefits prevailed over long term water conservation practices.
Unconfirmed reports from local villagers indicated as the main reason for this failure the inadequacy
of soil to grow bamboo successfully in the area. Finally there was poor planning from the part of the
government agencies in charge. Bamboo was planted to provide a source of income to farmers who
could sell bamboo as raw material for paper production to the local paper mills. However, shortly
after the bamboo programme was launched the government shut down all paper mills in order to cut
down chemical contamination of the water of Wuma river.

In addition to these problems, there is the fact that there are still large amounts of farming in slopes
over 25°, which need to be returned to forestry in the watershed. Cultivation in steep slopes for
subsistence agriculture is an old practice among poor farmers in the water basin. When liquor
companies negotiated with farmers the planting and buying of sorghum they (the farmers) did not
hesitate to enter into the agreement. The problem was that the only available lands to plant sorghum
were steep slopes, some with an inclination above 25 degrees. This land use contributed significantly
to the decrease water filtering capacity of the soil as well as the loss of the soil natural water storage
capacity. These practices contributed to lower the water flow downstream particularly during the dry
season.

ş The precipitation, according to the data fromGuizhou Meteorological Bureau, decreased from274.73mmin 1970 to 262.95 mmin
2000s. The average temperature changed from9.5đ in 1970s to 10.1đ in 2000s. Both the temperature and precipitation changed
little between decade-intervals.
Š Data sourced fromChishui River Basin Comprehensive Planning (2011) edited by Yangtze River Water Resources Committee.

Table2-4 Precipitation during 1970-2009 in dry seasons (mm)
Periods 1970-1979 1980-1989 1990-1999 2000-2009
Precipitation 274.73 212.73 219.97 262.95
Data source: Guizhou Meteorological Bureau
3. PWS Pilot Project in Wuma River Watershed
3.1 Relationship between Wuma River and Liquor Enterprises
The liquor enterprises take water directly from Chishui River in the area of Maotai, where Wuma
River has great impact on the water used by liquor-manufacturing enterprises in that area. As it is on
the right bank of Chishui River and close to Maotai Town, Wuma River, springing from J ingba and
Mushiwo Village of Changgang Town of Renhuai City, flows through Wuma Town and Maoba
Town and finally runs into Chishui River at Aokou Village (refer to Figure3-1). The estuary of
Wuma River is only 13 km away from the water intake of Maotai Distillery Co., Ltd., which means
the quality and quantity of the river will directly affect the liquor production of Maotai and other
liquor enterprises in Maotai Town. Therefore, Wuma River is the tributary with the largest influence
on the quality and quantity of water used by liquor-producing enterprises in Maotai Town.
According to the Medium and Long Term Developing Plan of Guizhou Maotai, the water intake of
Maotai distillery will be moved 3km closer to the upstream. The water intake therefore will be closer
to the estuary of Wuma River, and the influence of the river’s water quantity and quality will be
much more visible.

Figure 3-1 Location of Wuma River Watershed
3.2 Importance of Liquor Enterprises
Renhuai city houses 60% of all famous liquor producing companies in China. There are about 143
companies operating downstream of Wuma river basin producing more than 2000 brands of liquor.
Their output for 2009 was 100.000 tons with yearly sales of 12.70 billion RMB. These enterprises
employ about 40.000 persons from the area. They comprise 90% of the total local industrial output.
Representatives from Renhuai liquor industry enterprises such as Maotai Group, Guowujian,
Yunfeng, Guotai and J iuguijiu Group, expressed their concerns about decreasing of water quantity.
The liquor enterprises have indicated that the lowering of water supply is already impacting normal
production. The water supply in the area from Maotai Town to Xijiu Town is woefully inadequate
during dry season. This results in the decrease of water storage capability, which leads in turn to
limitations in the water in-taking the liquor enterprises. Representatives from the liquor enterprises
have expressed their interest in finding ways to improve the environment of Wuma river watershed
so as to strengthen the river’s capacity to produce a stable supply of water during the dry season.
4. Introduction to Wuma River Watershed: Geographic Location
Wuma River is one of the 27 main level tributaries of Chishui River, and the most important
tributary in Renhuai. Wuma River originates in J ingba, town of Changgang, runs through four towns,
Changgang, Wuma and the boundary of Luban and Maoba, meets Chishui River at Aokou. The
geographic coordinates are ranging within 106°11′16″-106°21′-106°30′E, and 27°38′55″-
27°43′08″N. The total area of the watershed is 510.29 km
2
, which accounts for 4.5% of the area of
Chishui River basin. The watershed is close to Zhunyi City at the east, faces to Longjing Township
and J iucang Town of Renhuai City at the west, adjacent to J insha County at the south and Gulin
County of Sichuan Province at the north (See Figure 4-1).

Figure 4-1 the map of Xienong Village

Wuma town in turn is divided into 7 Villages: The Village selected for this PDA is Xienong Village
which includes 12 Village Groups. Among these Longtangba has been chosen as the pilot site for
this PDA. (See Table 4-1)
Table 4-1 villages and village groups of Wuma
Towns in
Wuma River
Basin
Villages in
Wuma Town
Village Groups in
Xienong Village
Wuma Erhe
Changgang Sanyuan
Luban Hongjun
Maoba Xienong Long Tangba
Longli J iaotong
Yukong Bai Yangtun
Tunshan Ma J iapo
Gao Shancha
Suo Luoping
Chang Huitu
Chen J iagou
Huang Shiwo
Xienong
San J iaotang
Ya Zitai

4.1 Land Use Patterns in Wuma River Watershed
The total size Wuma River Basin (Table 4-2) is 51029.14 hectares, of which the area of arable land is
14056.4 hectares, (27.55% of the total land); forest land is 22062.08 hectares, or 43.23%; and
construction land is 1090.99 hectares, (2.14%.) From data in the Table below we can draw the
following observations regarding land use patterns along Wuma River Basin:

1. The farming area in slopes with over 25° of inclination accounts for 53.49% of total sloping area,
and 35.07% of total area of dry land. The proportion of high steep slopes or over 25 degrees of
inclination by town are: Changgang Town: 43.19%; Luban Town: 55.80%; Wuma Town: 82.27%
and, Maoba Town 45.33% respectively; It can be seen that proportions of cultivations in steep slopes
(over 25 degrees) are higher in Wuma Town than in the other towns.

2. The percentage of forest cover within the river basin is low. The forest land covers 16,678.25
Hectares
ľ
in Wuma river basin, taking up 32.68% of the whole land. The following Table (4-3)
indicates the percentage of forest land in each county.

ľ
The data is fromthe interpretation of the remote sensing image of Renhuai, which is fromNational Administration of Surveying,
Mapping and Geoinformation.
Table 4-2 Current Land Use in Wuma River Watershed (2009) Unit: Hectare
Soil types and Percentage Changgang Town Luban Town Wuma Town Maoba Town
Total land 11424.59 12437.11 12821.52 14256.52
Arable land 3110.63 3841.74 4394.48 3445.63
Forest land
Ŀ
5547.17 6349.24 6281.38 8186.01
The Arable land proportion of the total land (%) 27.23 30.89 34.27 24.17
The Forest land proportion of the total land (%) 48.55 51.05 48.99 57.42
Source: Overall Planning of Wuma(2006-2020), edited by Land and Resources Bureau of Renhuai, 2010.
Table 4-3 Slopes of Wuma River Watershed (2009) Unit: Hectare
Items Changgang Town Luban Town Wuma Town Maoba Town
Total land 11424.59 12437.11 12821.52 14256.52
Sloping arable land 1876.06 2492.37 1090.46 2178.55
arable land˚25° 810.20 1390.74 897.07 987.55
The proportion of sloping arable land of the total land (%) 16.42 20.04 8.50 15.28
The proportion of arable land˚25°of the sloping land (%) 43.19 55.80 82.27 45.33
Source: Overall Land Use Planning of Wuma(2006-2020), edited by Land and Resources Bureau of
Renhuai, 2010.
Situated in the midstream of Wuma River, Wuma town enjoys better natural conditions, such as
water supply, than other three towns along the watershed. With prominent agricultural reclamation
and cultivation, a large number of lands that are unfit for cultivation are reclaimed (see Figure
4-2&5-1). According to table 4-2, the slope fields of over 25° occupy 82.27% of the sloping fields,
far higher than the percentage of other towns (43.19% of Changgang, 55.80% of Luban and 45.33%
of Maoba). Additionally, a slope field of over 25 degrees takes up 41.07% of the dry lands which is
higher than the average level 35.07% of Wuma river basin. Thus, it can be seen that the problem of
irrational reclamation of sloping farmland over 25 degrees in Wuma river basin is most prominent in
Wuma Town.

Ŀ
The forest land includes the shrub land, sparse land and etc, in which some cannot be used to calculate the forest coverage rate, so,
the data of forest land is bigger than the forest coverage rate.

Figure 4-2 sloping farmland in Wuma River Basin

5. Hydrological Analysis of Wuma River
5.1 Total Volume of Water Resources
Wuma River is a typical rain-source river basin, which means the water quantity is closely related to
the amount of precipitation. Because there is no hydrological station on Wuma River, the data of
Wuma River are estimated from unstructured interviews in Wuma watershed and secondary analysis
of Chishui River data at Maotai Hydrological Station. Based on the enquiry at the community of
Xienong and, calculating from the hydrological observations of Tongming River (which is about the
same in size as Wuma river), the average amount of runoff per month can be estimated. The
whole-year runoff of Wuma River is estimated at 151.1 million m
3
, of which 107.2 million m
3
is in
the flood season (April to September) and 43.9 million m
3
is in the dry season (October to March),
refer to Table 5-1. The average flow of Wuma River shows significant difference between dry and
flood seasons. The average flow in the flood season (April to September) is 6.77 m
3
/s, and only 2.78
m
3
/s during the dry season (October to March), refer to Table 5-2.

Figure 5-1 Sloping farmland in Wuma Town


Table 5-1 Average Amount of Runoff UnitφMillion m
3

These data estimated using from the size of the watershed, runoff depth of Wuma River precipitation of Renhuai,
and data of Chishui River at Maotai Hydrological Station. (rainy season is from April to Oct)

Table 5-2 Average Flow of Wuma River (2009) Flow φm
3
/s
Periods Apr May J un J uly Aug. Sep. Average amount in rain season
Flow 4.58 7.33 9.72 8.28 5.91 4.81 6.77
Periods Oct. Nov. Dec. J an. Feb. Mar. Average amount in dry season
Flow 4.42 3.27 2.35 2.08 2.15 2.43 2.78
These data are estimated from the size of the watershed, runoff depth of Wuma River precipitation of Renhuai, and
data of Chishui River at Maotai Hydrological Station.

These figures show that the quantity of water in Wuma River is low in dry season, which means less
water contribution to Chishui River which aggravates the deficit in the area of Maotai to Xijiu. Given
that most of the water from Wuma to Chishui is used by the liquor producing enterprises, the
increase of the water volume of Wuma River could help the liquor enterprises to alleviate the
pressure of water shortage.
5.2 Changing Runoff Trends
Integrating the field study with secondary data analysis of Chishui River at Maotai Hydrological
Station, we can estimate the changing trend of the runoff of Wuma: the average runoff of Wuma
Time J an. Feb. Mar. Apr. May. J un. J ul. Aug. Sep. Oct. Nov. Dec. Whole
year
Amount of
runoff
5.6 5.2 6.5 11.9 19.6 25.2 22.2 15.8 12.5 11.8 8.5 6.3 151.1
(%) 3.7 3.4 4.3 7.9 13.0 16.7 14.7 10.5 8.3 7.8 5.6 4.2 100.0
River in the dry seasons decreased from 68.7 million m
3
in 1960s to 43.9 million m
3
in 2009 (refer to
table 5-3 and Fig 5-2).
Table 5-3 Change of Runoff of Wuma River Unit million m
3

Period 1960-1969 1970-1979 1980-1989 1990-1999 2000-2009
Runoff of Wuma
in Dry Season
68.70 51.53 52.93 49.89 43.90
Runoff of Wuma
in Rainy Season
118.41 121.72 118.60 122.30 107.20
These data estimated using from the size of the watershed, runoff depth of Wuma River precipitation of Renhuai,
and data of Chishui River at Maotai Hydrological Station.


Figure 5-2 Change of Runoff of Wuma River Unit: million m
3

These data are estimated from the size of the watershed, runoff depth of Wuma River precipitation of Renhuai,
and data of Chishui River at Maotai Hydrological Station.
5.3 Water Consumption and the Available Volume
The pattern of decreasing water volume at Wuma River is quite similar to that of Chishui River (See
Table 2-1 and Fig 2-1). Water consumption, on the other hand, keeps on increasing (see Fig 2-3).
The figures in Table 2-3 show that the available water in Chishui River for the whole year in the area
of Maotai to Xijiu was 261 million m
3
, but it was 171 million m
3
short in the dry season. In other
words the water requirements by liquor enterprises in this area are higher than the bearing capacity of
Chishui River.
5.4 Causes of the Decreased Volume
The area of farming land in slopes over 25 degrees was 4,085.56 hectares in Wuma watershed (2009),
of which 897.07 hectares were in Wuma Town.
Driven by a steady increase in the market price of local red sorghum in Wuma River basin, it is
common to see deforestation to allow for cultivation of sorghum on steep and extremely steep slopes
in the river basin. The situation is particularly severe in upstream Xienong village in Wuma Town
which enjoys superior natural conditions and infra-structure advantages. In order to obtain higher
yields, farmers choose extensive cultivation and large-scale reclamation of steep and extremely steep
slopes to grow red sorghum, winter wheat, and corn. The extensive planting mode has greatly
devastated woodland and reduced the water storage (conservation) capacity of the soil which impacts
the contribution rate of Wuma River to Chishui River runoff.
6. Selection of Xienong Village of Wuma Town as the PWS pilot site
The rationale for selecting Xienong Village as the point for the development of the pilot includes the
following: the Town of Wuma is the only one whose entire territory is totally within the watershed of
Wuma River, and it is on the midstream of Wuma River. Other town such as Changgang Town,
where Wuma River originates, takes up a small portion of the watershed. As for Maoba Town and
Luban Town, Wuma River only runs through the boundary of these two towns and merges into
Chishui River. Moreover, there are no villages in this area.

Because the farmland must serve the needs of a growing population, more than 70% of the dry land
in slopes over 25 degrees is reclaimed as farmland. Forest cover is destroyed lowering the soil
filtering capacity as well as the water conservation capacity and, leading to frequent droughts and
floods, seriously affecting the stable flow of water in Wuma River especially during the dry season
when the downstream liquor enterprises need water the most.
6.1 Land Use Patterns and the Impacts on Water quantity
Wuma town occupies an area of 124.2km
2
(Fig 6-1) in the middle stream of Wuma River with a
population of 35,155. (2010) After the banning of paper factories and mills along Wuma River in
2009, the source of income of local people shifted toward traditional farming and activities outside
their community (migrating workforce). At present, the crops in dry land are mainly sorghum, corn,
wheat, potato and vegetables etc, the crops in paddy fields are rice and vegetables. Due to the local
residents’ financial needs, a large portion of land that is inadequate for cultivation is reclaimed as
farmlands to plant sorghum to be sold to liquor producing companies. That means these lands must
be ploughed every year and thus they are less able to conserve water when it rains. The continuity of
water supply during the dry season under normal/natural conditions is severely disrupted.


Figure 6-1 Location of Wuma Town
6.2 PWS as Possible Solution to the Problem
Among possible answers to the core hydrological problem (e.g.,alternate livelihoods development,
enact and apply legislation regarding cultivation on slopes with 25 degrees, etc.), PWS is regarded as
the most efficient under circumstances prevailing at Wuma watershed. Changes in land use patterns
influence eco-transpiration amount; impact runoff, as well as the volume of water in the dry season.
According to the water conservation norm defined in Eco Function of Forest Evaluation Standard
δLY/T1721-2008,) and considering the conditions prevalent in Wuma water basin, the water
conservation capacity of natural forest is estimated at 1300m
3
/hm
2
; for artificial forest it is 1000
m
3
/hm
2
and for bush it is 800 m
3
/hm
2
.

A proposed PWS mechanism would include the change of farmland of Wuma watershed in slopes
over 25 degrees to forests. This will result in the production of at least 5 million m
3
water per year,
which will contribute to alleviating the water shortage problem downstream. In addition, returned
farmland changed into forestry will help restore and maintain the water conservation capacity of the
soil upstream allowing for the release of stores water during the dry season. The provision of these
services will help liquor companies to maintain levels of production. It may also improve the
livelihood among participating communities who benefit from changes in land use (introducing for
example cash crops) as well as from the water service provision to downstream users.
7. Conclusion
The hydrological assessment of Wuma River watershed shows that the core water problem faced by
downstream liquor enterprises is the decreasing volume of water during the dry season. A major
cause of this problem is unsustainable human activities, especially deforestation after 1950s and
cultivation in plots above 25 degrees in slope. Although in recent years, there was some
improvement in the ecosystem due to the implementation of the “Returning Farmland to Forestry”
policy, the limited volume of water remains a crucial problem for the liquor enterprises. This is so
because farmers seek to improve their livelihood by planting cash crops such as sorghum, thus
contributing to lower the water conservation capacity of the soil.

Establishing a Payment for Watershed Services (PWS) mechanism can be an effective way,
(combined with the policy of “Returning Farmland to Forestry” ) to improve the ecosystem capacity
to provide hydrological services (control soil erosion and increase water conservation capacity)
thus alleviating the water problem downstream while improving the livelihood of poor farming
communities upstream. “Sellers” and “buyers” benefit and the environment is restored and protected
through the working association of services providers and service users.
Appendix:
Appendix I. Methodology
Primary data collection to establish changes in water quantity require a period of time much
longer than the duration of this study (5-8 months) This is so because patterns of water
changes become visible, measurable and evident over a long period of systematic monitoring
under various conditions, for example during the wet and dry seasons. We have therefore
relied on existing records (Records at Maotai Water Station) documenting changes over a
long period of time (40 years).This secondary analysis has provided reliable and valid data in
support of our definition of the core hydrological problem. This data has been supplemented
with data gathered in the field through several visits to the participating communities where
the team has interviewed several individuals. Finally extensive desk research has been
conducted particularly reviewing official research documents from different spheres of
Government.
1 Field work
Adopting a multidisciplinary methodology, the research team has conducted several types of
field work in Wuma River basin. Among these, we include visits and informal conversations
with local residents and authorities; review in situ of land use patterns and soil erosion.
Research techniques included community unstructured interviews. These techniques
permitted an overview of the hydrological conditions in the watershed and an understanding
of the livelihood at the community. This information is used as a foundation to plan next steps
into this PDA.
2 Data collection
In order to analyze the hydrological condition of Wuma River Basin, we collected secondary
data of water yield during the flood and dry seasons. These data was supplemented with
information from other research centers and from relevant hydrological statistical yearbooks.
3 Review of the relevant literature
Information was gathered from recent journals, documents, government work reports and
statistics yearbook relevant to Wuma River and Chishui River. Besides, a large number of
data and main points in original research papers, journals and reports were also reviewed to
collect materials useful to our research.
4 Unstructured interviews
We conducted Unstructured interviews (three people in Xienong, 2 people in Longli, 2 people
in Sanyuan and 1 person in town of Wuma) ’The following themes were discussed “ water
seasonal quantity changes in recent years.; “ water quality changes in recent years ”;
“reasons for changes”. The answers given are consistent with the secondary data collected
from Maotai Hydrological Station.

Appendix II. List of Acronyms
mm: millimeter
m
3
: cubic meter
m
3
/s: cubic meter per second kg/m
3

km
2
: square kilometer
t/km
2
: ton per square kilometer
t/km
2
·a: ton per square kilometer annual


1


Livelihood Assessment Report
Long Tangba of Xienong Village in Wuma River Basin, Renhuai City, Guizhou
Province

WWF China
Guizhou Normal University
Guizhou Academy of Social Sciences
March, 2013
2

Contents

1. Project Context .......................................................................................................... 3
2. Location and economic profile of Wuma Town ........................................................ 3
3. Selection of Pilot Site ................................................................................................ 5
3.1 Xienong Village ................................................................................................ 5
3.2 Long Tangba community as pilot site ............................................................... 6
4. General Description and Livelihood Assessment of Pilot Site .................................. 8
4.1 A Geographic Note ............................................................................................ 8
4.2 Socio-Economic Profile of the Community ...................................................... 8
4.3 Income Generating Activities ......................................................................... 10
4.4 Land-use Status ............................................................................................... 13
4.5 Relationship between poverty and environmental degradation: ..................... 14
5. Relationship between land use and Wuma River’s Water Shortage ....................... 14
6. Land Use Change as a Proposed Solution to the Water/Livelihood Problem ......... 16
6.1 Relationship between Community and Liquor Enterprises ............................ 16
6.2 Land use change to address the core hydrological problem at pilot site. ....... 16
6.3 Awareness and Willingness to participate in PWS .......................................... 17
7. Conclusion ............................................................................................................... 20
8. Appendix .................................................................................................................. 21



3

1. Project Context
WWF China is conducting a Pilot Demonstration Activity (PDA) under ADB RETA 6498 in
Chishui Watershed in order to explore the conditions under which a Mechanism for Payment
for Watershed Services (PWS) could best operate. This PDA is designed as a pilot PWS to
address the problem of deteriorating water quality/quantity downstream and improve the
livelihood of poor upstream farmers. In the hydrological assessment, the core hydrological
problem faced by water users (i.e. liquor enterprises) has been defined as well as the
anthropogenic cause of such problems. Following the findings of the hydrological assessment,
this Livelihood Report focuses on Xienong Village in Wuma town as the most suitable area
for intervention. In this study, we aim to identify and profile the people potentially involve in
the pilot, how they use the land, how this land use is evolving, how these practices contribute
to the core hydrological problem and what actions might be required, including
compensations to change the current land use. This report includes a basic social & economic
profile of Long Tangba community of Xienong Village in Wuma River Basin.
2. Location and economic profile of Wuma Town
Wuma Town (see Figs. 1 and 2 below), is located about 30 km away from Renhuai City. It
borders with Luban and Changgang Town on the east; Maoba Town on the west; J insha and
Zunyi City on the south and joins Chishui River on the north, with a total area of 124.2 km
2
.
Wuma Town enjoys the convenience of road infrastructure with (208) Provincial Highway,
Qing-Zhong San-Hong and Ren-J in Road through the center of Wuma Town.


Figure 1 Location of Wuma Town
4





Figure 2 Location of Wuma Town and Liquor Enterprises


Under the jurisdiction of Wuma Town there are seven administrative villages (communities)
including Erhe, Sanyuan, Hongjun, Xienong, Longli, Yukong and Tunshan with a total
population of 35,155 (2010). The permanent resident population is 31,296, of which 1,143 are
non-agricultural population and 30,153 are agricultural population. In 2008, the combined
gross output value of industry and agriculture was RMB 672 million (108.4 million dollars),
including the gross industrial output value of RMB 528 million (85.2 million dollars) and
agricultural output value of RMB 144 million (23.2 million dollars); the annual per capita
income was RMB 3245 (523.4 dollars). However, since the Renhuai City Government shut
down paper mills and restructured the coal mine enterprises along Wuma River in 2009
1
,
agriculture has become the main economic activity in Wuma Town, with sorghum being the
main crop produced.

1
There are 11 coal mine in Wuma Town including two in Xienong Village. Currently, they are all shut down by the
government for environmental protection.
Liquor enterprises
Wuma Town
5


Wuma River Valley features vast ravines and gullies, high mountains and steep slopes with
great disparity of elevation. The arable area is 4,394.48 hectares, accounting for 34.27% of the
total land area, In addition to sorghum, agriculture production includes conventional crops,
such as rice and corn.
3. Selection of Pilot Site
3.1 Xienong Village


Figure 3 Xienong Village Diagram

Xienong Villege includes twelve village groups which are Long Tangba, J iaotong, Bai
Yangtun, Ma J iapo, Gao Shancha, Suo Luoping, Chang Huitu, Chen J iagou, Huang Shiwo,
Xienong, San J iaotang and Ya Zitai with area of 22km
2
(2,200 ha). There are 1073 households
with a total population of 4617 (See Fig. 3)

Table 3-1 Basic information of Xienong Village
Village
group

-1-
Number of
households

-2-
Population

-3-
Arable
land (ha.)

-4-
Arable
Sloping
land
(ha.)
-5-
Sloping
land
above 25
degrees
(ha.)
-6-
Proportion
of Slope
land over
25
degrees in
Arable
slope land
(%)
-7-
Proportion
of Slope
land over
25
degrees in
Arable
land (%)
8-
Long
Tangba
116 504 48.67 30.00 24.00 80.00% 49.32%
J iaotong 51 258 12.00 5.33 4.00 75.00% 33.33%
6

Bai
Yangtun
76 316 28.27 18.20 9.10 50.00% 32.19%
Ma J iapo 58 239 14.00 7.33 5.87 80.00% 41.90%
Gao
Shancha
77 258 37.73 37.73 37.73 100.00% 100.00%
Suo
Luoping
64 320 14.00 6.67 5.33 80.00% 38.10%
Chang
Huitu
143 617 21.27 10.00 9.60 96.00% 45.14%
Chen
J iagou
105 508 13.87 2.53 2.53 100.00% 18.27%
Huang
Shiwo
128 516 32.07 13.47 10.77 80.00% 33.60%
Xienong 116 480 86.67 50.00 40.00 80.00% 46.15%
San
J iaotang
58 225 11.40 10.00 8.00 80.00% 70.18%
Ya Zitai 81 376 28.64 20.53 16.43 80.00% 57.36%
Total 1073 4617 348.57 211.80 173.37 81.85% 49.74%
Average 89 385 29.05 17.65 14.45 - -
Data sources: Xienong Committee
3.2 Long Tangba community as pilot site
Long Tangba Community of Xienong Village, Wuma Town has been selected as the site for
the development of the PWS pilot. The rationale for this selection is twofold:

First, the population of Long Tangba Community is distributed along the bank of the Wuma
River. The population size and extension of arable land in Long Tangba community are
relative higher than in the other groups. The proportion of crops in slope land with an
inclination over 25 degrees in Long tangba is 49.32%. Although there are higher proportions
in Gao Shancha (100%), San J iaotang (70.18%) and Ya Zitai (57.36%), these communities
are either far from the Wuma riverbank or have small areas of arable land in slopes above 25
degrees, and do not contribute as significantly to the core hydrological problem.

Second, unsustainable land-use is high. An increasing number of sorghum crops have been
planted since 2007 in Long Tangba Community in terrains with an inclination over 25 degrees.
From table 3-1, it can be seen that, in Long Tangba, the farming area in slope land above 25
7

degrees account for 80% of the total arable slope land (Col.7). These steep slopes are
unsuitable for sustainable agriculture. Farmers, however, have been forced to use this land as
a result of the economic failure of the “returning the land for bamboos plantation”
government policy. Long Tangba community faces therefore a contradiction whereby their
livelihood impacts the ecosystem negatively more significantly than in the other communities.

The hydrological study has demonstrated the relationship between unsustainable land use
(crops in steep slopes) and lower volume of water during the dry season. Thus, current land
use associated with livelihood patterns in Long Tangba Community has a direct negative
impact on e water flow in Wuma River. The relationship “livelihood/water flow” in Long
Tanba makes this community a suitable location to test a PWS as a financing conservation
mechanism which addresses conservation and poverty alleviation at the same time.

Figure 4: The project area of Xienong Village



8


4. General Description and Livelihood Assessment of Pilot Site
4.1 A Geographic Note
The Community is located in a sloping zone on the east bank of Chishui River and to the west
of Dalou Mountain, belonging to the transition mountainous area from the north edge of
Yunnan-Guizhou Plateau to Sichuan Basin. It has a mid-subtropical humid monsoon climate,
with rain and high temperatures during the rainy season, and relatively less sunshine, high
humidity, moderate rainfall and frequent summer droughts. The land mainly consists of
intermixed carbonatite and silty mudstone. The rock texture is relatively soft, due to its
geographic location (middle subtropical monsoon climate) as well as the absence of forest. It
is vulnerable to weather conditions such as fluvial processes which results often in landforms
with steep slopes and deep valleys. This fractured landform is extremely prone to loss of soil
& water in the rainy season, causing increasing sediment concentration in Wuma River with
significant impact on water quality and water quantity.

There are six categories of soil types in this area. Namely paddy soil, yellow soil, lime soil,
purple soil, yellow-brown soil and mountain meadow soil. Geology, geomorphology and type
of cultivation impact the soil distribution in the area creating a great variation. This diversified
soil shows significant differences vertically. The ridges with an altitude of over 1400m
include are sporadic distribution of mountain yellow-brown soil; the area with an altitude of
700 to 1400 m is composed mainly of lime soil and zonal yellow soil while the syncline
valleys below 700m include pieces of purple soil. Farming activities are conducted mostly in
areas below 1400 meters.

This soil analysis is critical to understand the patterns of land use, the productivity of
agricultural practices and most importantly to establish the level of congruency between land
aptitude and actual land use. The lack of congruency is quite often the cause of environmental
degradation as evidenced in Long Tangba community where farmers are left with no option
but to use a land whose composition, structure and location are unsuitable for sustainable
agriculture.
4.2 Socio-Economic Profile of the Community
This Community has a total of 116 households and 504 people, all of whom belong to the Han
ethnicity. The existing arable area is 48.67 hectares. Most of the cultivated area is planted
with sorghum as a supply of raw material to Moutai Distillery Co., Ltd. and other liquor
enterprises.; The forest area is 53.33 hectares including the area of bamboo returned from the
cultivation land.

There is only a temporary clinic with two medical doctors available in Xienong Village. They
9

provide basic diagnostics and treat common respiratory and digestive problems. For more
complicated health issues villagers have to see doctors at the town hospital or the county
hospital. Most villagers get water directly from Wuma River either by pumping or manually.
According to the baseline survey conducted by WWF research team, most household use
4000-6000L water per month.

Table 4-1 Long Tangba Village Group: Population by Gender and Age 2013 (N=60)
Gender Age Groups
Male Female 0-7 8-18 19-30 31-45 46-60 Above 60
Head 60 0 0 0 0 21 22 17
Spouse 0 57 0 0 0 24 22 11
Children
1-2 60 45 6 22 34 7 0 0
3-4 15 6 6 22 22 5 2 0
Others 5 20 0 0 12 5 2 6
Total 140 128 12 44 68 62 48 34

It is interesting to notice that the average number of children (2.12) is higher than the one
child policy. The age group with the highest number of people is the 19-30 group with 68
persons accounting for 25% of the total. This is followed by the age group 31 to 45 with 62
persons or 23% of the total. These two groups ages 19 to 45 in fact account for 48% almost
half of the total population in the sample. We are dealing with a relatively “young
population”.

Education Level
There is no school in this community. Two adjacent primary schools belong to Xienong
Village: Primary School has 13 teachers and 283 students and Hongguang Primary School has
8 teachers and 104 students. In General terms, the educational level is adequate as only 5%
fall under the category “illiterate”. Among these however, women (spouses) represent 73%,
while the category “Head of household” (males) represent only 13%. At the other end of the
education continuum (higher education), there are no women under this category while 3 men
are included. The overall picture is consistent with a rural educational profile whereby women
have significant less formal education than men and children have more years of formal
education than their parents (26 children with education above high school compared with
only 3 parents).

Table 4-2 Long Tangba Village: Educational Level 2013 (N =60)
Illiterate Primary school J unior high school Above high school Total
Head 2 29 26 3 60
Spouse 11 36 10 0 57
10

Children 8* 41 51 26 126
Others 3 6 15 1 25
Total 24 112 102 30 268
Note: * Children from 0-7 do not go to school

4.3 Income Generating Activities
The main source of income of villagers in Long Tangba Community comes from the sales of
sorghum. As Maotai Distillery Co., Ltd. and other liquor enterprises purchases sorghum as
raw material, most farmers are willing to plant sorghum. In addition seeds and fertilizer are
provided by Maotai Distillery Co., Ltd. Thus, a guaranteed buyer, convenient market prices
and free agricultural inputs create a most appealing economic offer for the farmers.
Production of sorghum varies from 3750kg/ha. to 6000kg/ha. According to the current
purchasing price, income per hectare can reach up to between RMB 24,000 to 43,200 (3871.0
to 6967.7 dollars). Income of households varies according to the size of arable area devoted to
planting sorghum. Under these favorable conditions, it is not difficult to understand why
farmers will use any available land to plant sorghum regardless of the impact on the
ecosystem. There are additional sources of income from migrant work or temporary
performance of some unskilled tasks during the non-farming season.

Table 4-3 Crops and income generated Long Tangba Community
Variety % of
plantation
% of
income
Changes over past 5
years
Foreseeable
Future developments
Sorghum 80 percent of
all crops
More than 80
percent
Plantation area is
determined according
to the demands of
Maotai Distillery Co.,
Ltd and other liquor
enterprises. More
slope lands over 25
degrees are used for
planting sorghum
compared with the
sorghum in past five
years.
1. The planting area of
sorghum and corn is
closely related to the
future Government
policy of returning
farmland to forest
(Ecological Function
Protected Areas
Conservation Planning
of Chishui River).
2. Sorghum plantation
is determined by the
demands of Maotai
Distillery Co., Ltd and
other liquor
enterprises. 3. Should
farmland be returned to
Corn About 10 per
cent of all
crops
No income, it
is for
self-consump
tion
No significant
changes
Rice About 10 per No income, it No significant
11

cent of all
crops
is for
self-consump
tion
changes forest, alternative crops
may include some fruit
forest with short term
economic benefits
(cash crops)
Fruit,
vegetables,
etc
Less than 1
percent of all
crops
No income, it
is just for
self-consump
tion
No significant
changes

Migrant workers from this village are young people seeking work principally in Guangdong,
Zhejiang and Fujian Province, etc. Most of them began to migrate soon after they graduated
from middle school or senior high school. Our survey shows that these migrant workers can
perform only unskilled work and consequently earn low wages which are not always paid
regularly. Thus their contribution to the family income is minimal or null.

Another source of family income is livestock farming (e.g., pig, cattle and chicken, etc.).
There is only one in 116 households processing over 100 livestock at present. Among
domestic animals, pigs are preferred for livestock farming. However, with the decreasing
prices of livestock sales in recent years and the limited area for household captive breeding,
most households choose not to rely on livestock farming as their main source of income.
Therefore, farmers gave up engaging in livestock breeding, and the overall livestock breeding
scale is in the smaller size in the community

A number of villagers from Long Tangba community of Xienong Village used to work in the
paper mills which provided their main source of income. However, in 2009 the local
government shut down all paper mills in order to improve the water quality of Wuma River.
Thus the main source of income of the villagers in Long Tangba community was cut off.
Although the workers from the mills were eligible for compensation of about RMB 165 (26.6
dollars) per month this was not only insufficient but only for a short period of time (ended in
2011). As an alternative source of income, few people in Long Tangba with specific skills
worked at the local coal mines. However, these coal mines were also shut down by the
government due to serious pollution problems. This further eroded the income source of
workers in the community
2
. Commerce in Long Tangba Community is limited to some small
business such as small stores which sell a very small volume of daily groceries and food.







2
The information is fromXienong Community
12



Occupation
Table 4-4 Long Tangba Village Group. Occupation 2013 (n=60)
Farming
Non-farming *
Labour Students Other
Head 34 24 0 2
Spouse 51 4 0 2
Children 7 54 52 13
Others 6 14 0 5
Total 98 96 52 22
* Non-farming includes long-term working outside the Village, Seasonal working outside the village,
local temporary workers and township enterprises employment.

A significant number of males (Head of household) work outside farming. We do not have at
this moment more detailed information regarding this category thus we can present but
tentative conclusions. Whether this occupation is full time or part time, continuous or
temporary, it represents 40% of the sample. As far as women are concerned however a
significant majority (92.7%) works in farming. Among children almost the totality does not
work in farming as they are either studying or working in “non-farming” categories or both.

Income
Table 4-5 Long Tangba Village Group . Average Income 2013 (N=60)
Farming Non-farming Income per person
Yearly Income (RMB)
1601(258.23
dollars)
3312(534.2
dollars)
4913(792.42 dollars) this is
unclear. It is more than the
total of farming and
non-farming income

The average income for “non-farming” activities is twice as much as the income for farming
activities. This distribution is also consistent with the rural-urban divide and the remuneration
scale. However, as mentioned before, most persons who conduct non-farming works
contribute seldom income to their family because they have to support their daily livings
outside of the community.

Expenditures
Table 4-6 Long Tangba Village Group Average expenses 2013 (N=60)
Expenses Farming Non-production expenses(RMB) Total
13

Production
Expenses
(RMB)
Daily living
expenses Education
Medical
Expenses Others
Average
expenses per
person per year
211.32
(34.1 dollars)
2316.98
(373.70
dollars)
1124.91
(181.44
dollars)
901.51
(145.40
dollars)
382.64
(61.72
dollars)
4937.36
(796.35
dollars)
Note: 1. Farming production expenses includes farming inputs (seeds, fertilizer and farming tools)
2. Daily living expenses include food, clothes, water, communication, etc costs.

Compared with the average income of the Long Tangba Group shown in Table 4-5, the total
average expenses per person (796.35 dollars) is higher than the average yearly income per
capita (792.42 dollars), Table 4-6 indicates that people spend less money in farming
production (34.10 dollars) than on non-production expenses including daily expenses,
education, medical expenses and others. This could be partially explained by the fact that
most farmers who sell sorghum to the liquor enterprises also receive agricultural inputs as part
of the compensation package.

All in all however we can clearly see the picture of poverty associated with the livelihood of
the community.
4.4 Land-use Status
Long Tangba Community is situated at the flood plain, between the first terrace and second
terrace along the river. Although the quality of the soil around the community is relatively
suitable for plantation, the pronounced mountain features and the broken terrain limit the size
of arable land. The Community primarily focuses on sorghum, with a small amount of corn
and rice.

Table 4-7Long Tangba Village Land use by area and crops
Arable land (ha) Non-Arable
land (ha)
Total
(ha)
Arable slope land˄ha˅
sorghum corn others Total Woo
d
land
Total <25
degre
es
≥25
degree
s
Total
38.93
(79.99%
)
4.87
(10.01
%)
4.87
(10.01
%)
48.67
(47.72%
)
53.3
3
53.33
(52.28
%)
102 6
(20%)
24
(80%)
30(61.64%)
Self-cons
umption
- all all - - - - - - -
Market all - - - - - - - - -
Source: Data is from Xienong Village Committee

14


4.5 Relationship between poverty and environmental degradation:
1. The majority of land in the community is non-arable or unsuited for agricultural
production.
2. A significant part of the arable land is used to plant sorghum as the only cash crop the
farmers can use to generate income.
3. The totality of the production of sorghum is sold in the market or delivered to liquor
companies.
4. Less than 20% of the arable land is used to produce crops for self-consumption. Food
security or food autonomy is questionable.
5. More than 60% of the crops are in slope land
6. More than 50% of crops are in terrain with an inclination greater than 25 degrees. Not
only an illegal use of land but a strong contributor to land degradation with decreased soil
filtering/storage capacity.
5. Relationship between land use and Wuma River’s Water Shortage
Long Tangba Community is surrounded by mountains with limited amount of arable land.
Agricultural production is limited and villagers have to reclaim barren hills, which leads to
destruction of forest cover. Although the “returning-farmland-to-bamboo-forest policy” was
implemented from 2003 to 2005, poor bamboo growth and no short term economic benefits
forced about 20% of the returned land to go back to crop plantation, resulting in deforestation,
steep slope cultivation and further destruction of forest cover.

On slopes and even steep slopes, farmers are driven by the economic benefit associated with
the sale of sorghum to the liquor producing company Moutai Distillery Co., Ltd. This crop
needs plowing the land each year, which results in single farming season and poor water
conservation capacity. Because of farming in steep slopes, increasing rainfall in rainy season
causes more surface runoff and more soil erosion. Also long-term use of chemical fertilizers
can cause water pollution. Such unsustainable land use patterns lead to the destruction of the
ecosystem, limit the possibility of local economic development and impact negatively
downstream areas.

Clearly this is the land use pattern that must be changed if the issue of decreasing water
volume is to be addressed effectively. It is also the framework within which PWS will be
tested in terms of its feasibility to deliver what is required to tackle issues of poverty and
ecosystem degradation.

15


Figure 5 Unsustainable Land Use

The hydrological assessment indicated that the core problem for water users downstream is
the limited volume of water during the dry season. We have so far shown in this livelihood
assessment the historical evolution of conditions leading to unsustainable farming practices by
poor members of the community. The link between upstream land use and downstream
shortage of water has been clearly established.

On the floodplains, influenced by both floods and drought caused by rain season and dry
season respectively, and driven by the economic benefits of sorghum plantation, the local
farmers do not plant rice any longer, instead they plant sorghum the main source of income of
the community.

The result of this complex evolution of factors is a degraded ecosystem with limited service
production capacity; poor soil productivity and limited options for the poor farmers. This is
the big challenge facing Long Tangba Community in Wuma River Basin.
16


Figure 6 Reclaimed Slope Farmland

6. Land Use Change as a Proposed Solution to the Water/Livelihood Problem
6.1 Relationship between Community and Liquor Enterprises
Land use practices upstream directly impact on the quality of water required for liquor
production downstream. For instance, during the drought of 2011, production at most liquor
enterprises in Maotai Town was discontinued. A stable flow of quality water is closely related
to the integrity of the ecosystem in Wuma River Basin. Restoration of the degraded ecosystem
along Wuma River Basin is not only beneficial to the local communities’ livelihood but also
important to the continuous production of quality national-level Maotai liquor.
6.2 Land use change to address the core hydrological problem at pilot site.
Forest cover must be restored and erosion/sedimentation must be controlled. These must be
the outcomes required to address the hydrological problem. Among priority actions to achieve
such outcomes there is reforestation. This however must be explored taking into account some
basic facts:
x Native species must be used
x Selection of species must consider the type of soil and the need to protect it from
continuous erosion. Soil water filtering/storage capacity must be restored. Root
consistency and leave shape must be taken into account.

Another priority action is Terracing. This is an efficient- although expensive- option to
control erosion- sedimentation. This should be essayed initially in terrain with not too
pronounced slopes (below 25 degrees). Terrains with an inclination of 25 degrees or more
should –when possible- not be used for agriculture. Should there be no more land available
for agriculture, alternative income generations activities must be thoroughly explored.
17


Information gathered around the pilot site indicated as a feasible land use change option,
agro-forestry, return farmland to forest (natural forest) and terracing.

These are the actions to be undertaken should this pilot progress to the next stage. A careful
selection of areas for intervention should be conducted within Long Tangba community.
6.3 Awareness and Willingness to participate in PWS
Table 6-1 (below) shows that the majority of the 60 persons surveyed early February
indicated a “strong” willingness of participating in the PWS programme. In contrast, their
environmental awareness is “average”
Table 6-1 Long Tangba Village Awareness and Willingness 2013 (N=60)
Strong Average Weak
Environmental awareness
3
4 48 8
Willingness of participating in PWS
4
58 2 0

Further research was conducted in the community in order to supplement initial information
on “willingness” and “capacity” to enter into the PWS mechanism. Additional data was
collected from a sub-sample of 25 farmers including 8 females in Long Tangba Community.
The main findings are presented below, but given that women are under-represented in this
sample, the findings may be biased.

Economic Profile of Respondents
Table 6-2 Proportion of crops in Steep slope land above 25 degrees
All 3/4 1/2 1/4
Land in steep slope land
above 25 degrees 0 10 (40%) 13 (52%) 2 (8%)

23 out of 25 or 92% of farmers in the sample have more than half of their crops (52%) in
steep slope terrains (land above 25 degrees). Sorghum is the principal crop and most of it
(84%) is planted in terrains with an inclination higher than 25 degrees (Table 6-3) All
respondents know about the liquor enterprises as the totality of their sorghum production is
sold to them (Table 6-4).


3
Strong means people know environmental problems and know how to protect environment. Average means they know the
environmental problems and want to protect environment. Weak means people do not care environmental protection.
4
Strong means people have will to change their land use. Average means people do not care whether change land use or not.
Weak means people do not want to change their land use.
18


Table 6-3 Main crops planted in steep slope land above 25 degrees

Sorghum Corn
Planting in steep slope land above
25 degrees(Mostly)
21 (84%) 4 (16%)

Table 6-4 Production sales
Know liquor enterprises Sell sorghum
Yes 25 25
No 0 0

Environmental Awareness
Table 6-5 Knowledge of environmental consequences of planting steep slope above 25 degrees
Knowledge of
environmental impact
of planting in steep
slope above 25 degrees
Yes
NO


Totally
know
Partially know Hard to say Total
Responds
1 18 (7 women) 2 21
4 (1 woman)
Note:
1. The environmental consequences of planting in sloping terrain include soil erosion, sedimentation, potential
pollution caused by chemicals and soil fertility decrease.
2. Totally know means people can tell more than two consequences, Partially know means people know one
consequences.

Table 6-6 Awareness of land use and water quantity

Water
Quantity
Increase
Water Quantity
decrease
No Change Don't know
Awareness of impact of steep slope
cultivation and water quantity
2(1woman) 6 (1 woman) 8 (2 women) 9(4 women)

21 out of 25 participants (84%) indicated that they know that planting in sloping terrain can
have environmental consequences. Among those 21 respondents, 19 (90%) can tell at least
19

one negative environment consequences such as erosion, sedimentation, potential pollution
caused by chemicals and soil fertility decrease (Table 6-5). However, in terms of the
relationship between having crops in sloping terrain above 25 degrees and quantity of water
downstream, only 6 respondents (24%) realized that this practice can cause a decrease in
water quantity (Table 6-6).

Data collected suggest that farmers have a “general” knowledge about environmental impact
of associated with land use. They lack however knowledge about the specific relationships
between their land use and the quantity of water.

Table 6-7 Knowledge of eco-compensation and Payment of Watershed Service

Heard of :
Eco-compensation
Heard of Payment for
Watershed Services
Yes-know the contents 0 0
Yes- don't know the real contents 14 1
No 11 (8 women) 24

Regarding knowledge about PWS only one respondent indicated having heard about PWS but
lacks knowledge about its real meaning. In contrast, 14 out of 25 respondents (56%) know
about “eco-compensation” from watching TV or from word of mouth. They have however no
knowledge as to its contents. All women in the sample have no knowledge of either
eco-compensation or PWS (Table 6-7).

Attitude and willingness toward land use change
When asking the respondents whether they want to change their location of their crops from
steep slope land over 25 degrees, all the 25 participants would like to change the location.
Most of the participants however (24 persons) qualified their answer indicating that there are
no other spaces for them to move to. Thus stopping cultivation in such terrain means no
cultivation at all. The financial impact of this change is a sever reduction of income.

24 out of 25 participants would like the liquor enterprises to give them compensation for an
eventual change in the use of land. Compensation includes either alternative income
generating occupations or the liquor companies paying the equivalent of their opportunity
costs. Villagers have indicated repeatedly during the survey their willingness to change their
current land use in favor of forest (fruits) as well as non-farming income generating activities
such as constructing an aquatic amusement park, aquaculture or eco-tourism. They realize
however how are hard will be to implement these possibilities given the absence of both
technical financial support.
20


7. Conclusion
The inhabitants of Long Tangba Community are at or below the poverty level relative to both
national and international standards. The main source of income of the villagers in Long
Tangba Community comes from the sales of sorghum to the liquor companies who facilitate
seeds and inputs to the farmers and assure prices above market value. Because of these
opportunities farmers use as much as possible of their limited areas of arable land, encouraged
by high profits. These include new arable lands on steep slopes above 25 degrees. This
practice leads to serious water loss and soil erosion and even stony desertification in some
regions.

Analysis of the relationship between the community’s present livelihood and water shortage
of the Wuma River, shows water loss resulting from present land use patterns. Possible
solutions to the water problem faced by liquor-enterprises include: returning farmlands to
forests (including the fruit forestry and natural forestry); agro-forestry and terracing. These
changes in land use could alleviate the problem of water shortage and, additionally help
reduce the volume of soil erosion. Alternative non-agricultural activities such as construction
of water amusement parks and the development of freshwater aquaculture may also help the
community to avoid their dependence on sorghum plantation on sloping farmland over 25
degrees.

These opportunities are all embedded in the testing of the PWS pilot, the purpose of which is
to test the viability of this mechanism as a finance tool to restore degraded ecosystems,
alleviate poverty and assist private corporations in the profitable use of ecosystems required
for their production.



21

8. Appendix
Appendix1: Date gathering techniques and information collected for livelihood assessment:

Data Gathering
technique
Source of information
Respondents
Themes Relevance of
Information
Desk Research
Document
review
x Renhui County
office
x Wuma River Basin
office
x Environmental
Protection Agency
Historical background of
community.
Maps
Institutional Governance
To define the
Institutional
parameters of site
selected.
To identify and assess
Governance systems in
relation to
conservation
Field Research:

Visit to the site Geomorphology
Forest Cover
Land use patterns
Basic knowledge of
bio-physical
characteristics of site
selected
Interview with
key Informers


x Director of the
Environmental
Protection Department
of Renhuai County
x Chief of Ecology
Section, Environmental
Protection Department
of Renhuai County
x Mayor of Wuma
River Town
x Head of the
Environmental
protection Station of
Wuma River Town
x Chief of the Office
of Corporation of Wuma
River Town
Status and functions of the
environmental protection
office of Wuma River Basin
Current plans for the
protection of the upper
reaches of Chishui River and
the Ecological Function Area
Socio-economic conditions
of upstream communities.
Environmental protection
and pollution control of the
Wuma River Basin
Mining industry impact’s on
Chishui river. ( Especially
the Dazhu Coal Mine)
Views of key decision
makers are gathered
and interpreted.

Policies on
conservation and
development are
known and analyzed
In depth group
discussions
x Representatives of
Wuma River Township

x Leaders of Xienong
Village







Government’s initiatives for
the protection of Wuma
River Basin and
government’s Development
plans in the near future.
Local leadership
debates conservation
vs. development
issues.
22

Participatory
Rural
Assessment
(PRA)
Groups of local
villagers in Xienong
Village.
Wuma River’s impact on
local communities.
Environmental protection of
Wuma River by local
communities.
Impact of community
development on the
environment of river basin.
Possible scenarios for
treatment protection Wuma
River basin.
Local participation in
environmental protection

Local farmers share
their views on
community problems
regarding the
environment and their
livelihood.
Share their views as to
possible solutions and
their feasibility under
current political and
economic conditions.
Survey 60 families in Xienong
Village with different
economic background.
Socio economic status
Systems of community
stratification.

Willingness
Assessment
Random select 25
persons (including 8
females) from 60
families to further
assess the willingness of
the participation of the
PWS
Assessment of Willingness
and Awareness




Field work

23


Forum Discussion


Participatory Rural Assessment

24


Questionnaire

Share the communication documents including project introduction and results with Villagers

25


Appendix 2 Questionnaire sample

Questionnaire (N=60)
Investigator˖ Date˖ Survey site˖
I. Information of family members
Persons in Household A B C D E F
Relationship with head of the
household
5


Age
Gender
Male
Female
Ethnic
Han
Other
Education
level
Illiterate
Primary school
J unior high school
High school
Above high school
Occupatio
n
Farmers
Non-f
armin
g
Long-term
working
outside the
county

Seasonal
working
outside the
county

Township
enterprises
employees


5
Relationship with head of the household includes: Head, spouse, son, daughter, daughter in law and so on.
26

Local
temporary
workers


II. Information of Land use

Arable land (ha) Non-Arable land (ha)
Total
(ha)
Arable slope land
sorghum corn others Woodland
<25
degrees
≥25
degrees
Total
Production
Self-
consumption
Market

III Information of agriculture production
Type Area (ha.) Output (Kg/ha.)
Crops
Rice
Corn
Sorghum
Potato
Sweet Potato
Pepper
Chinese red pepper
Chinese chestnut
Beans
Melons
Fruits
Others
Livestock
Chicken
Duck
Goose
Pig
27

Cow
Sheep
Other

IV. Information of income and expenses
Income per year (yuan)
Total Farming
Non-farming
Livestock breeding Work Others

Expenses per year (yuan)
Total Education Production
Daily
expenses
Medical
expenses
Others


V. Information of living environment
House condition (tick)
Brick and timber Timber Brick Others

Energy consumption (%)
Coal Wood Methane Electricity Charcoal

Domestic waste discharge (%)
6

Arbitrary discharge Reasonable discharge

Water in use
Water
source
Water consumption (L/per
family)
Water quality(good/average/poor)


Environmental awareness (tick)
7

Strong Average Weak

6
Arbitrary discharge means people who discharge domestic water without any restriction. The discharges may go to the river
directly without any treatment. Reasonable discharge means that people discharge the domestic water to certain places with
some treatments.
7
Strong means people know environmental problems and know how to protect environment. Average means they know the
environmental problems and want to protect environment. Weak means people do not care environmental protection.
28



Capacity and Willingness to participate in PES (tick)
Strong Average Weak


29



Appendix 3: Questionnaire on Environmental Awareness and Willingness

Time: Investigator˖ Gender of Interviewee Age of Interviewee

1. How much of their land is in steep slope terrain (>25 degrees)?
A. All B. 3/4 C. 1/2 D .1/4 E. No steep slope land

2. What do you plant (mostly) in steep slope terrain (>25 degrees)?

A. Sorghum B. Corn C. Sweet Potato D. Others

3. Do you know the consequences for the environment of planting in such terrain?
8
What is
it?

A. Totally know B. Partially know C. Don’t know

4. Do you know the liquor companies? (If the respond answer no, then go to the question 6. )
A. Yes B. No

5. Do you sell sorghum to liquor companies?
A. Yes B. No

6 Do you know the relationship between having crops in sloping terrain and quantity of water
downstream in dry season?
A Water quantity increase B. Water quantity decrease C. No change

7. Would you like to change the location of their crops? Where? How?

8. What would it take to change the location of your crops?

9. Would you enter in negotiations with the liquor companies to improve/change their land
use practices?

10. What kind of arrangements would you like to have with the liquor companies?

8
Environment consequences includes erosion, sedimentation, potential pollution caused by
chemicals and soil fertility decrease, etc.
30


11. Have you heard (known) Eco-compensation?

A Yes (Specify) B. No

12. Have you heard (known) Payment of Watershed Service?

A. Yes (Specify) B. No

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