The Conditionality of Wetland Ecological Compensation: Supervision Analysis Based on the Game Theory

Abstract The supervision of wetland ecological compensation (WEC) is critical for the conditionality and effects of WEC policy implementation. Based on the field research in the Poyang Lake, the paper uses the game theory to systematically analyze the supervision issue in WEC, and analyzes the impact of weak supervision on farmers' future behavior choices after the implementation of wetland ecological compensation policy by using incomplete information dynamic game model. The paper concludes that (1) WEC has weak supervision, which greatly dampens compensation effects. (2) The key underlying causes of weak supervision include low compensation rates, low default costs and the low probability of actual supervision. The impacts of the three causes are not the same but decreasing. (3) Further analysis based on the dynamic game model with incomplete information discovers that weak supervision affects rural households’ current and future behavioral choices. Therefore, in order to address the roots of weak WEC supervision, scientific and reasonable compensation rates should be developed; default costs should be increased; and the actual supervision probability of supervisory authorities should be continuously raised.