Micro and Macroeconomic Analysis of Ecological Compensation

Although so far, the definition, the design of specific mechanisms, the ways or means of traditional micro-ecological compensations have varied, but it aims at to motivate individuals to provide additional ecological services... [ view full abstract ]

Although so far, the definition, the design of specific mechanisms, the ways or means of traditional micro-ecological compensations have varied, but it aims at to motivate individuals to provide additional ecological services and meet the efficiency goal for individuals demanding of ecological services within the scope of a small-scale space. The characteristics of traditional micro-ecological compensation are: (1) adapting to a smaller spatial scope; (2) mutual understanding the behavioral information of both parties; (3) assessment of ecosystem services is relatively easy; (4) the mechanism of ecological service incentives is relatively clear; (5) the efficiency as the implementation of the evaluation criteria. However traditional micro-ecological compensations cannot guarantee the objective of ecological sustainability within the scope of a large-scale space and cannot explain the intrinsic links between efficiency and ecological sustainability. Macro-analysis of ecological compensation targets sustainability and seeks to explain the relationship between sustainability, equity and efficiency. Firstly, the services of natural capital can be divided into two broad categories: ecological services as directly provided and resource services as input elements. Based on the conditions of natural capital not completely reversible, not completely substitutability, and the public product natures of ecological services and the like, we use the inter-temporal production possibility curve as tool to deduce the long-term irreversible diminishing result of natural capital under the market mechanism. Secondly, taking a certain level of key ecological services as a condition of sustainability we shows that it is a necessary and reasonable social choice to maintain a sustainable scale of natural capital. Thirdly, based on the above conclusions and the ethical basis of intergenerational equity for natural capital use, it is further concluded that the establishment and maintenance of institutional rules for a sustainable scale of natural capital is a guarantee of ecological sustainability. Central to macro-ecological compensation is the establishment of a system of rules which ensure the equitable distribution of the costs for maintaining sustainable natural capital at all generations. The overall conclusion is that the market mechanism will be constrained by the establishment of macro-ecological compensation with the social rules of maintaining ecological sustainability and equitable distribution, so that the allocation of resources can achieve economic efficiency on the basis of ensuring ecological sustainability and social equity.