How much will cash forest encroachment in rainforests cost? A case from valuation to payment for ecosystem services in China

•Current conservation for tropical forests neglects the local aspiration to cultivate.•Potential cash forest encroachment may decrease the net value by up to 50%.•Benefits from water and recreation can offset the opportunity costs.•Indiscriminative payment and complex paths hamper the targeted payment.•Context-specific valuation and payment could be replicated adaptively for similar areas in SE Asia. Over the past 50 years, cash forest encroachment presents a major threat to tropical rainforests in Southeast Asia. Economic and social benefits provided by natural conservation and the loss of these benefits through encroachment must be accounted for. Here, we evaluated ecosystem services provided by a protected rainforest, Mengyang Reserve in China, in comparison to a simulated scenario where possible encroachment occurs. Strict conservation (i.e., current state) provided more value from carbon stocks, greenhouse gas sequestration, domestic water supply, and nature-based recreation. Yet, local villagers still aspire to expand their cash forests, especially rubber and tea. Based on our conservative estimate, the cash tree encroachment basically satisfying the cultivation needs of the villagers would reduce the net value by approximately 50% per year. Through placing numerical values on loss and benefit, governmental policy makers and local stakeholders might be able to visualize the impact of conservation policy guidance. Horizontal transfer payment based on village-explicit opportunity costs should be proposed from the context-specific valuation of ecosystem services, and should include increased funding, simplifying the process, and expanding the scope of payments. Our results provide a useful lesson on the understanding the effectiveness of ecosystem services value in tropical reserves.