Research on the Performance Evaluation System for Ecological Product Value Realization Projects: A Case Study of the Comprehensive Water Environment Management Project for a Drinking Water Source

Abstract

Establishing a mechanism for ecological product value realizing (EPVR) is a critical component of China’s ecological civilization strategy, aimed at translating the concept that “lucid waters and lush mountains are invaluable assets” into actionable economic policies. Although central government investments in the form of project for EPVR have increased significantly, surpassing CNY 700 billion by 2024, studies rarely focus on these projects and how to evaluate them. Evaluating the performance of EPVR projects is essential for optimizing resource allocation, enhancing project accountability, and ensuring the sustainable realization of ecological, economic, and social values. This study innovatively defines the conceptual connotation of EPVR projects and constructs a comprehensive performance evaluation system based on a “benefit-cost” analysis, comprising a multi-dimensional indicator system, quantifiable calculation methods, and explicit evaluation criteria. As water source protection projects are typical EPVR projects, the comprehensive water environment management project of Hongfeng Lake is selected for an in-depth empirical study. The results reveal that (1) the total annual benefits amount to CNY 923.66 million, dominated by ecological benefits (84.04%); (2) with an investment of CNY 1194.66 million, the project yields a net loss and a moderate performance index (PCPI = 0.77); (3) the project performance is primarily affected by weak economic value conversion stemming from restrictive zoning policies and underdeveloped market mechanisms for ecological services; and (4) integrated development pathways—such as ecotourism, eco-aquaculture, and ecological branding—are proposed to enhance the long-term sustainability of the project. The Hongfeng Lake case establishes a replicable framework for global assessment of analogous projects and delivers actionable insights for enhancing benefit–cost ratios in public ecological initiatives, with costs confined to data collection, modeling, and validation. Therefore, this study contributes a quantifiable and reproducible tool for the full lifecycle management of EPVR projects, thereby facilitating more informed government decision-making. Key findings reveal the following: (1) A comprehensive “Benefit-Cost” performance evaluation framework, pioneered in this study and tailored specifically for individual EPVR projects, surpasses regional-scale accounting methodologies like Gross Ecosystem Product (GEP). (2) A novel consolidated metric (PCPI) is introduced to integrate ecological, economic, and social dimensions with cost input, thus enabling direct cross-project comparison and classification. (3) The framework operationalizes evaluation by providing a detailed, adaptable indicator system with explicit monetization methods for 26 distinct benefits, thereby bridging the gap between theoretical value accounting and practical project assessment. (4) The empirical application to a drinking water source protection project addresses a critical yet understudied category of EPVR projects, offering insights into “protection-oriented” models.

1. Introduction

Establishing the mechanism for ecological product value realization (EPVR) is an important part of China’s ecological civilization, which is a key measure to implement the concept that “lucid waters and lush mountains are invaluable assets” to increase policy support to protect and utilize ecological resources sustainably [1,2]. After China’s 2021 national policy, Opinions on Establishing and Improving the Mechanism for Realizing the Value of Ecological Products—introduced as framework document [3]—several national government ministries have actively promoted this work, such as the carbon emissions right of the Ministry of Ecological Environment, EPVR of soil and water conservation in small watersheds of the Ministry of Water Resources, ecological product catalog of the National Forestry and Grassland Administration, eco-agriculture development for rural revitalization of the Ministry of Agriculture and Rural Affairs, and the natural resources’ high-level protection and efficient utilization of the Ministry of Natural Resources. As the core carrier to promote EPVR, some demonstration projects have been launched across the country, guided by these policies, exploring to build a wide variety of EPVR paths involving by the government and the public.

From 2020 to 2024, the central government budgetary investment has arranged CNY 600 billion, CNY 610 billion, CNY 640 billion, CNY 680 billion, and CNY 700 billion, respectively, for EPVR projects. Specifically, more than 50% of the projects were infrastructure projects to treat and restore contaminated ecological environment during 2020 to 2023, such as channel cleanout, drainage network building, vegetation recovery, and wetland restoration. While in the year 2024, the type of EPVR projects has become more diversified, and the main manifestation is the proportion of projects for developing ecological products has been significantly increased, with the emergence of ecotourism projects, eco-agriculture projects, carbon sequestration projects, and eco-product certification and traceability system construction projects. Meanwhile, it is worth noting that more than 70% of central budget-supported projects are primarily for infrastructure construction, which shows that the central budget is inclined to support infrastructure construction projects for providing a good condition for the participation of multi-subject in EPVR. Since the EPVR project is a systematic undertaking involving ecology, economy, and society, scientifically evaluating the construction effectiveness of EPVR projects has not only become the objective demand of project declaration, examination, and approving, but also a crucial tool for filtering the projects with economical, ecological, and social benefits. Therefore, scientific evaluation on project performance is conducive to optimize the allocation of resources by investing limited funds and resources into projects with greater contribution to achieve maximum values of EPVR.

Driven by policy guidance, existing research on EPVR quantitative analysis has mainly focused on accounting regional eco-product value, employing the Millennium Ecosystem Assessment (MA) [4], Equivalent Factor Method [5], Emergy Method [6], Gross Ecosystem Product (GEP) Accounting [7,8], and Value of Ecosystem Product in specific geographic units (VEP) [9] to evaluate the ecological product values across different administrative levels. In addition, scholars are also concerned about EPVR pathways [10,11], institutional safeguards [12], and policy performance evaluation [13]. However, there are very few works in the EPVR projects field, whether its concept or quantitative analysis, including ecological product value accounting methods for project and performance evaluation methods. Although there are some studies on the effectiveness of the evaluation of projects regarding ecological compensation [14], ecological restoration [15], and water conservancy construction [16,17], the following shortcomings still exist: (1) By the end of 2023, twenty-five provinces in China had conducted ecological product value accounting in various scopes, but these regional accounting results are difficult to allocate to specific project entities, greatly restricting their applications [18,19]. (2) The subjects of the above studies cannot represent EPVR projects. (3) The existing studies mainly focused on benefit evaluation for ecological restoration projects, especially the ecological benefits, neglecting to integrate economic and social benefits together with ecological benefits [20,21]. (4) The constructed benefit evaluation models were composed of benefit indicators, without considering the project costs.

To bridge the identified gaps, this study introduces a novel, project-specific performance evaluation system. The primary novelty lies in shifting the focus from regional accounting to project-level assessment, and from benefit-only evaluation to an integrated benefit–cost analysis. This approach provides a practical decision-support tool for the entire lifecycle of EPVR projects—from ex-ante screening to ex-post assessment.

2. Materials and Method

2.1. Evaluation Framework

Integrating the conceptual connotation of ecological products and related state EPVR policies [22,23,24], this study defines Ecological Product Value Realization Projects as “the systemic project serving EPVR to enhance value realization capability of regional ecosystem products to promote human well-being, sustainable economic and social development, under the premise of ensuring the stability and integrity of the ecosystem”. As a practical carrier of EPVR, the project has the ultimate goal to achieve synergistic growth of ecological, economic, and social benefits, with the characteristics as follows: (1) ecosystems engaged without ecological harm; (2) market-monetizable; (3) sustainably operated; and (4) serving one or more segments of the entire lifecycle of ecological products. Accordingly, EPVR projects can be classified as (1) infrastructure for ecological product supply (e.g., forest wellness bases, eco-agricultural product bases); (2) infrastructure for supporting ecological product value transformation (e.g., trading platforms, quality testing, and certification facilities); (3) capacity building for ecological resource survey and monitoring; and (4) ecological resource operation and development construction.

Therefore, the comprehensive benefits generated from EPVR projects, including enhanced ecological benefits, economic development, and social well-being, are inseparable from cost-effective mechanisms, because the improvements of ecosystem quality, ecological product supply capacity, ecological product premiums, and ecological benefits for the people require significant capital investment. Consequently, this study constructs a project performance evaluation framework based on the “comprehensive benefits-cost input” analysis (Figure 1), providing evaluation indicators, calculation methods, and evaluation criteria for EPVR project performance assessment.

2.2. Evaluation Index System

The performance evaluation of EPVR projects requires a comprehensive quantification of benefits across both the engineering construction and operational phase [25]. Considering the feasibility, scientific rigor, and practicality of indicator selection, a performance evaluation index system for EPVR projects is developed based on project-specific characteristics and an “ecological-economic-social” perspective. Consequently, the indicator system is structured into two categories and four hierarchical levels, comprising 2 first-level indicators, 4 second-level indicators, 7 third-level indicators, and 26 fourth-level indicators (

Table 1. EPVR projects performance evaluation index system.

No.	First-Level Indicator	Second-Level Indicator	Third-Level Indicator	Fourth-Level Indicator	Illustrate
1	Comprehensive Benefits	Ecological benefit	Regulation Services	Water Conservation	Value of water conservation
2				Soil Conservation	Value of soil conservation
3				Windbreak and Sand Fixation	Value of windbreak and sand fixation
4				Coastal Protection	Value of coastal protection
5				Flood Regulation and Storage	Value of flood regulation and storage
6				Air Purification	Value of air purification
7				Water Purification	Value of water purification
8				Fixed carbon dioxide	Value of fixed carbon dioxide
9				Release oxygen	Value of release oxygen
10				Climate Regulation	Value of climate regulation
11				Noise Reduction	Value of noise reduction
12		Economic Benefit	Material Supply	Material Products	Value of material products
13				Renewable Energy	Value of renewable energy
14			Cultural Services	Leisure and Recreation	Value of leisure and recreation
15				Value-added Landscape	Added value of landscape
16			Resource Utilization	Energy Cascading Utilization	Value of energy cascading utilization
17				Water Resource Recycling	Value of water resource recycling
18				Material Recycling	Value of material recycling
19		Social Benefit	Human Well-being	Employment Promotion	Value of income from generated employment
20				Improved Living Standards	Value of increased resident income
21			Resource Conservation	Energy Saving	Value of energy saving
22				Water Saving	Value of water saving
23				Material Saving	Value of material saving
24				Land Saving	Value of land saving
25				Mineral Resource Saving	Value of mineral resource saving
26	Cost Input	Cost	Construct Cost	Construct Cost	Value of construct cost

).

Among these, the ecological benefit indicators are designed by adapting the Millennium Ecosystem Assessment (MA) framework to capture the core ecosystem services enhanced by EPVR initiatives. As a globally recognized and comprehensive classification system for ecosystem services, encompassing provisioning, regulating, supporting, and cultural services, the MA framework informed the selection of indicators under the “regulating services” category, which are most directly reinforced by environmental management projects. Indicators including water purification, carbon sequestration, and climate regulation are prioritized based on the following criteria: (1) Scientifically established with widely accepted quantification methods. (2) Policy-relevant, aligning with national goals for carbon neutrality, water conservation, and pollution control. (3) Monetizable through established techniques (e.g., replacement cost, market price), allowing for integration into the benefit–cost analysis.

Subsequently, the accounting method for each index is determined, as shown in

Table 2. Calculation methods of ecological benefit.

Indicator	Formula	Illustrate
Water Conservation	$V_1=Q_1\times P_1$	V1 represents the value of water conservation (yuan); Q1 is the amount of water conservation (m3); P1 is the market price of water resources (yuan/m3).
Soil Conservation	$V_2=V_{2,S}+V_{2,D}$ $V_{2,S}=\lambda \times \left({\displaystyle \raisebox{1ex}{$Q_{2,D}$}\!\left/ \!\raisebox{-1ex}{$\rho $}\right.}\right)\times c_2$ $V_{2,D}={\displaystyle {\sum }_{i=1}^n{Q}_{2,D}\times C_{2,i}\times P_{2,i}}$	V2 represents the soil conservation value (yuan); V2,S represents the value of reducing siltation (yuan); V2,D represents the value of reducing non-point source pollution (yuan); QD represents the soil conservation quantity (t); (yuan/m3); ρ represents the soil bulk density (t/m3); λ represents the sedimentation coefficient; c2 represents the cost of reservoir construction(yuan/m3); C2,i represents the purity of the ith pollutant (such as nitrogen or phosphorus) in the soil (%), where i represents the number of nutrient substances in the soil; P2,i represents the cost of treating the ith pollutant.
Windbreak and Sand Fixation	$V_3=\left({\displaystyle \raisebox{1ex}{$Q_3$}\!\left/ \!\raisebox{-1ex}{$\rho \times h$}\right.}\right)\times c_3$	V3 represents the windbreak and sand fixation value (yuan); Q3 represents the windbreak and sand fixation conservation quantity (t); ρ represents the soil bulk density (t/m3); h represents the thickness of soil desertification and sand cover (m); c3 represents the cost of sand control project (yuan/m3).
Coastal Protection	$V_4={\displaystyle {\sum }_{i=1}^n{Q}_{4,i}\times }{C}_{4,i}$	V4 represents the total value of coastal protection (yuan); Q4,i represents the length of the ith coastline (km/a); C6,i represents the protection cost of the ith coastline (yuan/km).
Flood Regulation and Storage	$V_5=Q_5\times C_5$	V5 represents the flood storage value (yuan); Q5 represents the amount of flood storage (m3); C5 represents the engineering cost and maintenance cost per unit capacity of the reservoir (yuan).
Air Purification	$V_6={\displaystyle {\sum }_{i=1}^n{Q}_{6,i}\times }{C}_{6,i}$	V6 represents the total value of water purification (yuan); Q6,i represents the purification amount of the ith water pollutant (t); C6,i represents the treatment cost of the ith water pollutant (yuan); i is the ith air pollutant.
Water Purification	$V_7={\displaystyle {\sum }_{i=1}^n{Q}_{7,i}\times }{C}_{7,i}$	V7 represents the total value of water purification (yuan); Q7,i represents the purification amount of the ith water pollutant (t); C7,i represents the treatment cost of the ith water pollutant (yuan); i is the ith water pollutant.
Fixed Carbon Dioxide	$V_8=Q_8\times C_8$	V8 is the value of fixed carbon dioxide (yuan); Q8 is the total amount of fixed carbon dioxide (t); C8 is the price of industrial carbon capture (yuan/t).
Release Oxygen	$V_9=Q_9\times C_9$	V9 is the value of release oxygen (yuan); Q9 is the total amount of release oxygen (t); C9 is the price for industrial oxygen production (yuan/t).
Climate Regulation	$V_{10}=Q_{10}\times C_{10}$	V10 is the value of climate regulation (yuan); Q10 is the total energy consumed by the transpiration and evaporation of an ecosystem (kWh/a); C10 is the electricity price (yuan/kWh).
Noise Reduction	$V_{11}=Q_{11}\times C_{11}$	V10 is the value of noise reduction (yuan); Q11 is the amount of noise reduction (db); C11 is the construction and maintenance costs of sound insulation walls (yuan·db/a).
Material Products	$V_{12}={\displaystyle \sum Q_{12,i}\times }{P}_{12,i}$	V12 is the value of material products (yuan); Q12,i is the amount of the ith product (t); P12,i is the price of the ith product (yuan/t).
Renewable Energy	$V_{13}={\displaystyle \sum Q_{13,i}\times }{P}_{13,i}$	V13 is the value of renewable energy (yuan); Q13,i is the amount of the ith renewable energy (t); P13,i is the price of the ith renewable energy (yuan/t).
Leisure and Recreation	$V_{14}=C_T\times N$	V14 is the value of leisure tourism (yuan); CT is the average travel cost for tourists (sampling survey); N represents the total number of tourists.
Value-added Landscape	$V_{15}=V_{15,H}+V_{15,R}$$V_{15,H}=Q_{15,H}\times (P_{15,H}-P_{15,H}^{\prime })$$V_{15,R}=Q_{15,R}\times (P_{15,R}-P_{15,R}^{\prime })$	V15 represents the added value of landscape (yuan); V15,H represents the added value of hotel (yuan); V15,R represents the added value of residential housing (yuan); Q15,H represents the number of hotel rooms sold (d); P15,H represents the price of sold hotel rooms (yuan/d); P′15,H represents the average price of hotel rooms (yuan/d); Q15,R represents the area of value-added residential housing (m2); P15,R represents the price of residential housing (yuan/m2); P′15,H represents the average price of residential housing (yuan/m2).
Energy Cascading Utilization	$V_{16}={\displaystyle \sum Q_{16,i}\times }(P_{16,i}-c_{16,i})$	V16 is the value of energy cascading utilization (yuan); Q16,i is the usage amount of the ith energy cascading utilization (kWh/a); P16,i is the price of the ith energy cascading utilization (yuan/kWh); c16,i is the cost of the ith energy cascading utilization (yuan/kWh).
Water Resource Recycling	$V_{17}={\displaystyle \sum Q_{17,i}\times }(P_{17,i}-c_{17,i})$	V17 is the value of water resource recycling (yuan); Q17,i is the usage amount of the ith inferior water resources (t/a); P16,i is the price of the ith inferior water resources (yuan/t); c17,i is the cost of the ith inferior water resources (yuan/t).
Material Recycling	$V_{18}={\displaystyle \sum Q_{18,i}\times }(P_{18,i}-c_{18,i})$	V18 is the value of material recycling (yuan); Q18,i is the usage amount of the ith recycling material (t/a); P18,i is the price of the ith recycling material (yuan/t); c18,i is the cost of the ith recycling material (yuan/t).
Employment Promotion	$V_{19}=Q_{19}\times P_{19}$	V19 is the value of employment promotion (yuan); Q19 is the number of new employment (person/a); P19 is the average wage of new employment (yuan/person).
Improved Living Standards	$V_{20}=Q_{20}\times P_{20}$	V20 is the added value of residents’ income (yuan); Q20 is the number of the regional residents (person); P20 is the average increase in per capita income (yuan/person).
Energy Saving	$V_{21}={\displaystyle \sum Q_{21,i}\times P_{21,i}}$	V21 is the value of energy saving (yuan); Q21,i is the saving amount of the ith energy (kWh/a); P21,i is the price of the ith energy (yuan/kWh).
Water Saving	$V_{22}={\displaystyle \sum Q_{22,i}\times P_{22,i}}$	V22 is the value of water saving (yuan); Q22,i is the saving amount of the ith water resource (t/a); P22,i is the price of the ith water resource (yuan/t).
Material Saving	$V_{23}={\displaystyle \sum Q_{23,i}\times P_{23,i}}$	V23 is the value of material saving (yuan); Q23,i is the saving amount of the ith material (t/a); P23,i is the price of the ith material (yuan/t).
Land Saving	$V_{24}=Q_{24}\times P_{24}$	V24 is the value of land saving (yuan); Q24 is the saving area of land (m2); P24 is the land price (yuan/m2).
Mineral Resource saving	$V_{25}={\displaystyle \sum Q_{25,i}\times P_{25,i}}$	V25 is the value of mineral resource saving (yuan); Q25,i is the saving amount of the ith mineral resource (t/a); P25,i is the price of the ith mineral resource(yuan/t).
Construct Cost	$V_{\cos t}={\displaystyle \sum C_{\cos t,i}}$	Vcost is the total investment of the project (yuan); Ccost,i is the investment of the ith construction content (yuan).

. Then, the net benefits of an EPVR project is calculated as:

$$V_{net}=V_{benefits}-V_{\cos t}={\displaystyle {\sum }_{\mathrm{i}=1}^{25}Vi}-V_{\cos t}$$

(1)

where V_net is the net benefit; V_benefits is the value of comprehensive benefit; V_i is the value of the i-th comprehensive benefits indicator (i = 1 to 25); and V_cost is the cost of the project.

2.3. Evaluation Method

The ultimate goal of EPVR projects is to achieve green and high-quality development, reflected as the sustainable transformation from ecological value into socioeconomic value while maximizing transformation efficiency. From this, the input–output ratio, coupled with the index system, is adopted to evaluate the comprehensive performance of EPVR projects across the ecological, economic, and social dimensions. Meanwhile, since the premise of EPVR projects is not to damage the ecological environment, having a non-negative ecological benefit becomes a prerequisite for project evaluation. The requirement for non-negative ecological benefits ensures that projects do not achieve economic gains at the expense of ecological degradation, consistent with the “no harm” principle in EPVR policies. Consequently, the project performance evaluation method is constructed as follows:

$$\left\{\begin{array}{c}{V}_{eco-benefit}={\displaystyle {\sum }_{i=1}^{11}{V}_i\ge 0}\\ PCPI={\displaystyle \raisebox{1ex}{$V_{benefit}$}\!\left/ \!\raisebox{-1ex}{$V_{\cos t}$}\right.}\end{array}\right.$$

(2)

where V_eco-benefit is the total ecological benefits; V_i is the benefit of the i-th ecosystem service calculated from Table 2, i = 1 to 11; PCPI is the project comprehensive performance index.

To enhance the practical applicability of the performance evaluation results, the specific thresholds (1.0, 3.0) in

Table 3. Evaluation criteria and application.

Value Range	Evaluation Result	Explanation	Application
			Scenarios	Proposed Actions
Veco-benefit < 0	Poor	Unacceptable	Advance Evaluation	Project is not feasible.
0 ≤ EP < 1	Moderate	Positive benefits, but less than investment cost; acceptable under certain conditions.	Advance Evaluation	Project has weak EPVR capacity; project components can be optimized.
			Post-fact Assessment	Check if construction adhered to design; identify issues for improvement.
1 ≤ EP < 3	Good	Considerable benefits, exceeding investment cost, but potential uncovered hidden costs may remain.	Advance Evaluation	Project has good EPVR capacity and can proceed with implementation.
			Post-fact Assessment	Project construction and operation performance is good; sustainable operation is viable.
EP ≥ 3	Excellent	Benefits far exceed investment cost, representing the best projects.	Advance Evaluation	Project has excellent EPVR capacity and can be given priority for implementation.
			Post-fact Assessment	Project construction and operation performance is excellent; sustainable operation and replication are recommended.

are established based on a combination of empirical observation, policy targets, and analytical conventions:

(1)

PCPI = 1.0: This is the fundamental break-even point in the cost–benefit analysis. It represents the minimum requirement for a project’s total monetized benefits to cover its costs, a universal criterion for financial viability.

(2)

PCPI = 3.0: This “Excellent” threshold is more stringent and accounts for several real-world complexities: (a) Hidden Costs and Uncertainty: It builds in a buffer for ecological or social costs that are difficult to fully monetize (e.g., biodiversity loss, community disruption). (b) Policy Ambition: It aligns with the high-performance targets set by Chinese ecological civilization policies, encouraging projects that deliver exceptional value. (c) Investment Attractiveness: A ratio significantly above 1.0 indicates strong efficiency and makes the project more attractive for public or private investment.

(3).

V_eco-benefit < 0 as a Veto Criterion: This strict rule ensures the evaluation system’s alignment with the core EPVR principle that economic or social gains must not come at the expense of ecological integrity, which will prevent “greenwashing” and ensures projects genuinely contribute to ecosystem enhancement.

The above thresholds provide a clear, tiered system for classifying project performance, supporting differentiated decision-making (e.g., prioritization, optimization, rejection).

3. Empirical Study

3.1. Study Area

Hongfeng Lake (26°33′ N, 106°27′ E), also known as Red Maple Lake, is a scenic area located in Qingzhen City, about 27 to 33 km west of Guiyang, the capital of Guizhou Province (Figure 2), and is one of the largest artificial lakes on the Guizhou Plateau, covering a total area of 200 square kilometers, with a water surface area of 57.2 square kilometers and a storage capacity of 600 million cubic meters (Figure 3a). The region experiences a subtropical humid monsoon climate, with an average annual rainfall of 1200–1400 mm and mean annual temperature of 14–16 °C.

As an important drinking water source for Guiyang, the lake serves a population of approximately five million people. Hence, the water quality of Hongfeng Lake will directly affect the normal production and daily life of the city, which becomes an urgent problem influencing people’s lives, social stability, and development. To protect drinking water safety, the Guiyang Municipal Government has implemented a comprehensive water environment management project for Hongfeng Lake, which includes fencing works, floating barrier isolation projects, surface debris collection, aquaculture wastewater treatment, sediment dredging, ecological resettlement, photovoltaic lighting system, and ecological infrastructure of the lake (Figure 3b). While prioritizing protection, the government also aims to foster local economic development through appropriate managed development of Hongfeng Lake. To address the acute conflict between ecological preservation and economic development, the Hongfeng Lake project serves as a representative EPVR case within aquatic ecosystems, making it a particularly relevant choice for empirical study.

Above all, this study selected Hongfeng Lake as a case study due to its (1) typicality as a representative drinking water source protection project under China’s EPVR policy framework, embodying the common conflict between ecological conservation and economic development; (2) data availability, with comprehensive and reliable data on project investments, environmental monitoring, and socioeconomic parameters accessible through government reports and public databases; (3) policy relevance, being a direct implementation of national and local water protection policies, thus an ideal subject for evaluating policy-driven EPVR initiatives; and (4) scalability, as the lessons learned can be adapted to similar water bodies in karst or plateau regions globally.

3.2. Data Sources

The data used in this study primarily include land use data, environmental quality data, meteorological data, and socioeconomic data. The land use data is sourced from the National Earth System Science Data Center (NESDC) and GlobeLand 30 (https://www.webmap.cn/commres.do?method=globeIndex (accessed on 9 October 2025)); the environmental quality data is sourced from the “Guiyang Ecological Environment Bulletin 2023” and the “Guiyang Ecological Environment Bulletin 2024”; the meteorological data is sourced from “China Climate Bulletin 2024” and “China Statistical Yearbook 2024”; the socioeconomic data is sourced from “Guizhou Province Statistical Yearbook 2024”, “Guiyang City Statistical Yearbook 2024”, and “Guizhou Province Water Resources Bulletin 2024”.

The investment values are derived from the project feasibility study reports, official government publications, and publicly available procurement contracts. Specifically, the ecological migration cost is based on compensation standards per household issued by the Guiyang Development and Reform Commission; the pollution source relocation cost is estimated using the annual output value of relocated enterprises; the construction costs for sewage treatment, isolation facilities, and smart platforms are from public bidding documents and municipal expenditure reports.

To ensure data reliability, cross-validation of data consistency has been conducted across multiple official publications during the project’s active implementation phase, although direct field verification remains feasible. Potential biases, such as reporting inaccuracies in statistical yearbooks or methodological differences between environmental bulletins, are acknowledged as limitations.

3.3. Results

3.3.1. Scope of Evaluation

Indicators such as “Windbreak and Sand Fixation” and “Coastal Protection” are excluded because Hongfeng Lake is an inland plateau lake dominated by karst geology, where sandstorms and tides are less relevant to aquatic ecosystems. (

Table 4. Scope of evaluation indicators.

Indicator Category	Indicators	Included in Evaluation Scope
Ecological Benefit	Water Conservation	Yes
	Soil Conservation	Yes
	Windbreak and Sand Fixation	No
	Coastal Protection	No
	Flood Regulation and Storage	Yes
	Air Purification	Yes
	Water Purification	Yes
	Fixed carbon dioxide	Yes
	Release oxygen	Yes
	Climate Regulation	Yes
	Noise Reduction	No
Economic Benefit	Material Products	Yes
	Renewable Energy	Yes
	Leisure and Recreation	Yes
	Value-added Landscape	No
	Energy Cascading Utilization	No
	Water Resource Recycling	No
	Material Recycling	Yes
Social Benefit	Employment Promotion	Yes
	Improved Living Standards	Yes
	Energy Saving	Yes
	Water Saving	Yes
	Material Saving	Yes
	Land Saving	No
	Mineral Resource Saving	No
Cost	Construct Cost	Yes

).

3.3.2. Benefit and Cost Analysis

The calculation results (

Table 5. Results of project benefits.

Indicators			Physical Quantity	Unit	Value (CNY Million per Year)	Subtotal (CNY Million per Year)
Ecological Benefit	Water Conservation	Water Conservation	29.1686	million m3 per year	240.06	776.24
	Soil Conservation	Reduce Siltation	0.2656	million t per year	0.88
		Reduce Non-Point Source Pollution of Nitrogen	3.1939	million t per year	1.66
		Reduce Non-Point Source Pollution of Nitrogen Phosphorus	0.7288	million t per year
	Flood Regulation and Storage	Lake Storage and Regulation	41.6097	million m3 per year	332.46
		Vegetation Storage and Regulation	1.6813	million m3 per year	10.90
	Air Purification	Sulfur Dioxide Purification	85.8900	t per year	0.10
		Nitrogen oxides (NOx) purification	3.1200	t per year	0.01
		Dust Elimination	2.2800	t per year	0.01
	Water Purification	COD Purification	0.4500	t per year	12.50
		Total Nitrogen (TN) Purification	0.0300	t per year	0.61
		Total Phosphorus (TP) Purification	0.0300	t per year	0.97
	Fixed Carbon Dioxide	Fixed Carbon Dioxide	0.0313	million t per year	2.03
	Release Oxygen	Release Oxygen	0.0228	million t per year	10.79
	Climate Regulation	Cooling and humidifying	163.2606	million kWh per year	163.26
Economic Benefit	Material Products	Freshwater Supply	7.3815	million m3 per year	14.76	79.89
	Renewable Energy	Hydropower	54.7000	million kWh per year	24.92
	Leisure and Recreation	Leisure and Recreation	/	/	36.79
	Water Resource Recycling	Circulating Water Aquaculture	0.3200	million m3 per year	0.64
	Material Recycling	Cement	3120.00	t per year	1.23
		Steel Bars	390.00	t per year	1.55
Social Benefit	Employment Promotion	Employment	500.00	person	49.93	67.53
	Improved Living Standards	Ecological Resettlement	2232.00 *	person	16.50
	Energy Saving	Solar Street Light	0.9855	million kWh per year	0.48
	Water Saving	Eco-irrigation for Water Conservation	0.0004	million m3 per year	0.0007
	Material Saving	Cement	97.50	t per year	0.04
		Steel Bars	117.00	t per year	0.46
		Straw	112.94	t per year	0.0011
		Fecal Residue and Waste Water	406.71	t per year	0.12
Total						923.66

Note: * The number of ecological migrants is based on an estimated 4 people per household, and there are 558 eco-migrant households.

) indicate that (1) the total benefits generated by the project are CNY 923.66 million per year; (2) the ecological benefits contribute CNY 776.24 million (84.04%), driven by Flood Regulation and Water Conservation; (3) the economic benefits are CNY 79.89 million (8.65%), mainly from hydropower and raw water supply; and (4) the social benefits are CNY 67.53 million (7.31%), which is the lowest among the total benefits (Figure 4).

Furthermore, the total investment can be calculated as CNY 1194.66 million (

Table 6. Cost investments of the project.

Content of the Project	Description	Investments (CNY Million Yuan)
Ecological migration	For 558 households in 7 villagers’ groups within the first-level protection area of Hongfeng Lake.	865
Shutdown and relocation of industrial pollution sources	Shut down 15 high-energy-consuming enterprises, demolish 176 livestock and poultry farms, over 700 fish cages and feed-fed fish farms, and remove 122,000 square meters of illegal buildings.	100 *
Construction of rural sewage treatment facilities	Build 133 to 134 sets of rural domestic sewage treatment facilities and their supporting pipelines to achieve full coverage of sewage in secondary protection zones and quasi-protection zones.	180
Construction of isolation and protection for water sources	38.5 km of fencing and 144 signboards were built in the first-level protection zone, and 677 m of water area isolation floating rafts were implemented.	13
Construction of a smart supervision platform	A “space-air-ground integrated” monitoring and early warning platform has been established, including automatic water quality monitoring stations and video surveillance points.	8.6
Treatment of black and odorous water	8 urban black and odorous water bodies including Dongmen River were treated, and 40.89 km of new sewage pipelines were built.	28.06
Total		1194.66

Note: * The cost of shutdown and relocation of industrial pollution sources is replaced by the annual total output value of these enterprises.

), mainly allocated to ecological migration (CNY 865 million) and pollution source relocation. According to the Implementation Plan for the Water Pollution Prevention and Control Action Plan of Guizhou Province, which outlines specific measures for protecting key water bodies such as Hongfeng Lake, the construction of pollution control project will continue through 2030. Therefore, this study assumes the current annual total cost of the Hongfeng Lake project to be CNY 1194.66 million. Then, the net profit outcome is then determined to be CNY −271.00 million. Because the ecological benefit is positive, the project comprehensive performance index (PCPI) can be obtained from Formula (2) to be 0.77, which means the project is considered acceptable but unsustainable according to Table 3.

3.3.3. Sensitivity Analysis and Validation

The values in Table 5 and Table 6 appear precise because they are drawn from official project documents and statistical yearbooks, which report specific figures. However, it is important to acknowledge the associated uncertainties:

(1)

Cost data, though sourced from official documentation, predominantly represent planned or budgeted expenditures rather than final actualized costs. Actual final costs may vary due to construction delays, price fluctuations, or scope changes. The lack of a reported deviation range in source documents is a limitation. For analytical purposes, these figures are adopted as fixed inputs but acknowledges this static snapshot may not capture dynamic financial realities.

(2)

Benefit valuation generates “exact” monetary values by applying unit prices (e.g., water price, carbon price, wage rates) to estimated physical quantities. However, this approach introduces key uncertainties stemming from both unit price variability and estimation errors in physical quantities, with (1) water resource prices exhibiting substantial regional and policy-driven variability; (2) carbon sequestration estimates relying on ecological modeling frameworks that inherently contain estimation errors; and (3) tourism valuation (V₁₄) derived through the travel cost method being contingent upon sample survey data, introducing sampling-related uncertainties.

To address the uncertainty inherent in valuation parameters, the study conducted a sensitivity analysis on key high-impact variables: the price of water resources and the shadow price of carbon. The analysis shows the PCPI is moderately sensitive to water price fluctuations but remains within the 0.73–0.81 range (

Table 7. Sensitivity analysis of PCPI.

Parameter Variation	Change in Total Benefit (Million CNY)	PCPI Result	Deviation
Baseline	923.66	0.77	-
Water Price +20%	971.68	0.81	+5.2%
Water Price −20%	875.66	0.73	−5.2%
Carbon Price +20%	924.08	0.77	+0.04%
Carbon Price −20%	923.30	0.77	−0.04%

). This confirms the robustness of the “Moderate” performance classification; even under optimistic pricing scenarios, the PCPI does not cross the threshold of 1.0 without structural changes to the project’s economic model.

3.3.4. Discussion

The empirical study reveals that while the Hongfeng Lake Comprehensive Water Environment Management Project yields a negative net benefit, its overall performance remains broadly satisfactory—yet still in need of substantial improvement. Given that water supply projects are typically regarded as public services rather than commercial ventures, a PCPI value below 1.0 (which would normally signal a loss in a market context) remains acceptable in this case, as evidenced by the project’s 0.77 outcome. The negative net benefit underscores the “public good” nature of such investments and aligns with the operational reality of similar service-oriented restoration projects in China, which often rely on government transfers to cover 20–40% of their long-term sustainability needs [26]. As a typical ecological product supply infrastructure initiative, government-funded projects are tasked not only with safeguarding drinking water source quality, but also with maximizing public welfare by building a solid foundation for the sustainable management and development of water resources. Therefore, this research affirms the necessity of rigorous evaluation by emphasizing that even service-oriented projects must demonstrate value-for-money, accountability, and sustainability in order to optimize public spending and achieve integrated ecological-economic-social outcomes.

To improve the performance of such projects, it is crucial to identify the root causes of weak economic conversion, where economic benefits contribute only 8.65% of the total outcomes. The analysis identifies that the limitation stems primarily from policy constraints rather than resource scarcity, with the following key factors:

(1)

Strict Zoning Regulations. Under China’s Water Pollution Prevention and Control Law, tourism and aquaculture are prohibited within Grade I water source protection zones, effectively restricting the monetization of high-value leisure and recreation potentials (denoted as V₁₄). This policy barrier directly suppresses market-based value realization.

(2)

Market Mechanism Deficiencies. Guizhou currently lacks mature trading platforms for critical ecological services such as Water Purification Value (V₇) and Carbon Sequestration (V₈), leaving these benefits as positive externalities rather than convertible cash flows.

(3)

Comparative Context. In contrast to wetland parks that often achieve an excellent performance through tourism revenues, drinking water protection projects inherently exhibit lower economic conversion efficiency. This underscores the necessity of establishing differentiated evaluation standards for “protection-oriented” versus “development-oriented” EPVR projects.

As a post-fact evaluation, the performance of such projects can hardly be enhanced by adjusting their construction scope. The key to improving the economic conversion efficiency of EPVR outcomes lies in shifting from passive conservation to proactive value realization with stronger governmental support and guidance. Recommended strategies include the following:

(1)

Eco-Fisheries: Introducing “clean-water fisheries” (e.g., non-feed, filter-feeding species) in non-core zones to monetize water purification services, which requires policy adjustments to permit limited, ecologically sound aquaculture in buffer zones.

(2)

Ecological Branding: Certifying agricultural products (e.g., “Hongfeng Pure Water” labeled crops) cultivated within the watershed to capture quality-based price premiums, depending on establishing trusted certification systems and market linkages.

By integrating these approaches, the project can more effectively translate ecological assets into tangible economic returns without compromising its core protective functions. Simultaneously, significant employment opportunities will be generated for local residents, leading to sustained growth in social benefits. Ultimately, the EPVR performance of Hongfeng Lake will shift from “moderate” to “excellent”, achieving the goal of synergistic protection and development.

The empirical findings resonate with, yet distinctively extend, the existing body of research on ecological project evaluation:

(1)

Dominance of Ecological Benefits: Consistent with studies on the Xin’an River ecological compensation project [14] and water conservancy projects in Zhejiang [16], the case study shows ecological benefits constituting the vast majority (84.04%) of total generated value, which reaffirms that environmental restoration projects are primarily creators of non-market regulatory services.

(2)

Beyond Benefit Accounting: Prior research often stops at benefit accounting (e.g., GEP calculation for a region [7,8]). This study’s key advancement is integrating these benefits with project-specific costs to calculate the PCPI, which shifts the question from “How much value is created?” to “How efficiently is value created relative to the investment?”. The efficiency metric (PCPI = 0.77) provides a more direct tool for project prioritization and budget allocation.

(3)

Highlighting the “Protection vs. Development” Spectrum: The low economic conversion efficiency (8.65%) at Hongfeng Lake starkly contrasts with the higher ratios often reported for development-oriented projects like ecotourism parks or wetland parks open to recreation [10]. This contrast is not a flaw but a critical insight, underscoring the necessity for differentiated performance standards and policy incentives. A drinking water protection project should not be judged by the same economic return expectations as a tourism development project. The presented framework, with its flexible indicator system, allows for such context-specific adaptation.

(4)

Validation of Enhancement Strategies: The proposed strategies, such as developing eco-fisheries and ecological branding, find support in the related literature. Studies on karst desertification control [10] and agroforestry [11] similarly advocate for value-added industries based on ecosystem quality. The study’s contribution is contextualizing these strategies within the strict regulatory constraints of a Grade I water source protection zone, proposing feasible pathways like “clean-water fisheries” in non-core zones.

While this study focuses on a single case for in-depth analysis, future research could strengthen the findings by incorporating a comparative approach. For instance, comparing Hongfeng Lake with a similar lake that has implemented more development-oriented strategies (e.g., a lake open to tourism) or with a less managed lake in the same region could highlight the differential impacts of protection vs. development models on PCPI. Such comparisons would further elucidate the trade-offs and effectiveness of different EPVR pathways and better demonstrate the evaluation framework’s generalizability.

4. Conclusions

This study develops a performance evaluation framework for EPVR projects, incorporating indicators, calculation methods, criteria, and application scenarios. Empirical analysis across Hongfeng Lake comprehensive water environment management project reveals the following:

(1)

The “Benefit-Cost” framework successfully quantified the “invisible” ecological values, proving that while the project has a financial deficit (CNY −270.99 million), the project generates massive ecological welfare.

(2)

The evaluation identified that the project functions as a “High Ecological/Low Economic” infrastructure, and the primary bottleneck lies in policy constraints, such as strict zoning regulations and the lack of market mechanisms to trade ecological credits (water rights, carbon).

(3)

To address the weak economic conversion capability, targeted suggestions on enhancement strategies are proposed, mainly focused on diversified business development paths of Hongfeng Lake’s eco-products, which require parallel policy innovations and market development.

(4)

The indicator system can be adapted based on local ecosystems (e.g., coastal, forest, wetland). The methodology is scalable for different administrative levels and can incorporate local data on climate, hydrology, and socioeconomics.

(5)

Monetary valuation is a core component of the evaluation framework, which quantifies benefits through market prices, shadow prices, and cost-based methods (e.g., water resource pricing, carbon trading, treatment cost avoidance). This approach allows ecological and social benefits to be expressed in monetary terms, enabling direct cost–benefit comparison and comprehensive analysis.

(6)

The proposed framework effectively quantifies integrated performance, providing a practical tool for project screening, optimization, and policy-making in China’s evolving EPVR landscape.

(7)

The framework’s flexibility in indicator selection and scalability across administrative levels makes it a versatile tool for ecosystem-based project management globally, as evidenced by similar valuation needs in Lake Bengaluru [27] and Lake Biwa [28]. Furthermore, the framework can be applied to green infrastructure projects [29], where benefits like air purification, noise reduction, and recreational value can be assessed through the same benefit–cost logic. Notably, a successful application in other fields requires (a) availability of local data for both biophysical metrics (e.g., tons of carbon sequestered) and unit prices for valuation; (b) careful selection of appropriate valuation methods suited to the cultural and market context (e.g., contingent valuation for cultural services in some settings); and (c) transparent communication about the uncertainties inherent in monetizing non-market goods.

Meanwhile, this study faces several limitations: (1) Due to the high computational complexity of ecological benefit indicators, a large number of parameters are required, but some may be unavailable, leading to inaccuracies in the results. (2) The total benefits are simply the sum of ecological, economic, and social benefits, without consideration of their differing contributions to the total benefits. (3) This study only provides a static snapshot. (4) The empirical analysis is based on a single case study, limiting the generalizability of the findings. Hence, further research on optimizing algorithms, assigning weights to the indicators, incorporating dynamic system dynamics (SD) models to simulate benefit flows over a 20-year lifecycle, and conducting comparative multi-case studies should be conducted to strengthen the scientific rigor and reliability of research results.